Tesla stock plunges amid declining sales and Musk’s political controversies
Tesla’s stock took a significant hit last week Tuesday, plunging over 8% and bringing the company’s market capitalization below $1 trillion. This marks Tesla’s lowest valuation since November 7, which was two days after President Donald Trump’s election victory. The electric vehicle (EV) giant has seen its stock price plummet 25% since the start of the year, starkly contrasting the Nasdaq’s relatively minor 1.5% decline over the same period.
The company’s CEO, turned political figure, has personally lost over $100 billion in net worth during this downturn. Despite this, Musk remains the world’s richest person, with an estimated fortune of $380 billion. The latest slide in Tesla’s stock follows a Reuters report revealing widespread disappointment among Tesla owners regarding the company’s latest upgrade to its partially automated driving system, particularly in China.
Customers noted that the “navigate on city streets” feature failed to meet Musk’s lofty self-driving promises, leading to negative comparisons with Chinese competitors like BYD and Xiaomi, which offer similar technology at a lower cost—or even for free.
European sales slump raises further concerns
Tesla’s troubles extend beyond the stock market, as its sales in Europe have sharply declined. The company sold just 9,945 vehicles in January, a 45% drop compared to the 18,161 units sold in the same period last year. Tesla’s market share in Europe has consequently fallen from 1.8% to 1%, according to data from the European Automobile Manufacturers’ Association (ACEA).
The decline in sales coincides with Musk’s growing involvement in political affairs, both in the U.S. and abroad. As a senior figure in the Trump administration’s newly created Department of Government Efficiency (DOGE), Musk has gained access to sensitive government data and has overseen mass firings in regulatory agencies, including those overseeing Tesla.
His political activities, particularly his endorsements of far-right European parties, have triggered protests and potential consumer boycotts.
Musk has publicly supported Germany’s far-right Alternative for Germany (AfD) party, calling it the “best hope for the future” and personally congratulating its co-leader Alice Weidel after the party doubled its electoral support in January.
He has also intervened in the UK’s political discourse, making unfounded accusations against Labour leader Keir Starmer regarding grooming gangs. European leaders, including French President Emmanuel Macron and Norwegian, British, and German officials, have publicly pushed back against Musk’s statements, which they perceive as meddling in domestic affairs.
The backlash appears to be affecting Tesla’s sales performance. In Germany, Tesla sold only 1,277 vehicles last month, its lowest monthly total since July 2021. Sales in France plummeted by 63%, marking Tesla’s worst performance in the country since August 2022. In the UK, Tesla registered fewer vehicles than its Chinese EV rival BYD for the first time, with its sales declining nearly 8% in a market where overall EV sales surged by 42%.
Tesla’s struggles extend to the US market
Tesla’s domestic sales are also faltering. In California, historically the company’s strongest US market, Tesla sales fell by 11.6% in Q4 2024, according to the California New Car Dealers Association. The company’s earnings report in late January revealed an 8% year-over-year drop in automotive revenue and a 23% decline in operating income.
Looking ahead
Tesla faces mounting challenges as it attempts to navigate an increasingly competitive EV market while grappling with the ramifications of Musk’s political engagements. With sales slumping in Europe, ongoing struggles in the U.S., and increasing competition from Chinese automakers, the company must find a way to regain consumer trust and stabilize its financial performance.
