Tesla's stock tumbles amid sales woes and Musk controversies
Tesla is facing significant losses in the stock market. The company's market value has dropped below one trillion dollars, and the stock price has fallen by more than 8 percent. This is the lowest level since early November 2024. The situation is influenced by weak sales results and controversies surrounding Elon Musk's political activities.
Since the beginning of the year, Tesla's stocks have lost 25 percent of their value, while the Nasdaq index has fallen by only 1.5 percent during the same period. Compared to the record high on December 16, 2024, the electric car manufacturer's stock price has decreased by over 35 percent. Elon Musk's net worth has declined by over 100 billion dollars during this period, yet he remains the world's richest person, with a fortune estimated at around 380 billion dollars.
The latest stock price drop occurred after a Reuters report indicated that Tesla had disappointed customers in China with a long-awaited update to its semi-autonomous driving system. Users complained that the "city street navigation" feature did not meet Musk's promises regarding autonomous driving technology.
Competing electric vehicle manufacturers in China, such as BYD, offer their driving assistance systems for free or at a much lower price. Xiaomi's SU7 model includes technology similar to that of the standard without additional charges.
business problems and political involvement
In the fourth quarter of 2024, Tesla reported results below analysts' expectations. Automotive revenue fell by 8 percent compared to the previous year's period, and operating profit decreased by 23 percent. The company attributes this to lowering average selling prices in its aging model lineup.
Another source of investor concern is Elon Musk's involvement in politics. As the head of the Department of Government Efficiency (DOGE) in President Trump's administration, he gained unprecedented access to government computer systems and taxpayer data. Musk contributed 290 million dollars to Trump's election campaign.
Musk's controversial political rhetoric led to protests from opponents in various locations, including in front of Tesla showrooms and service centres. The stock price also dropped after Trump announced plans to impose high tariffs on goods from Canada, Mexico, and China, coinciding with a decline in Tesla vehicle registrations in Europe in January and February 2025.
Are customers turning away from Musk?
What is the reason for the stock market declines? Tesla is experiencing significant sales declines at the start of 2025. According to data from ACEA, in January 10,511, new vehicles of this brand were registered in Europe, a 46 percent decrease compared to January 2024. All models recorded a drop in interest of at least 36 percent.
American analysts from Kalshi predict the worst quarter for Tesla in almost three years. They estimate that the company will deliver about 360,000 vehicles in the current quarter, a significant decrease compared to earlier periods when quarterly deliveries reached 500,000 cars.
Causes of the brand's decline in popularity
One of the main reasons for the decline in brand interest is Elon Musk's controversial activities and political engagement alongside President Donald Trump. In the United States, there have recently been protests against the head of Tesla. A survey conducted by Electrifying.com found that 59 percent of British respondents do not consider purchasing a Tesla due to Musk's actions.
An important factor is growing competition from European and Chinese electric car manufacturers. Additionally, Tesla's current model lineup is becoming outdated. The Model S debuted in 2012, and the Model X no longer generated the excitement they once did. Despite recent Model 3 and Y updates, the company has not introduced any entirely new vehicles to its lineup.
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