Tesla stock has been hit hard in recent months as CEO Elon Musk’s political involvement becomes a distraction, experts say. Sales of electric vehicles are down sharply in key markets like Europe and China. On Monday, Tesla shares plummeted 15 percent to end the day at $215 – the worst day for the stock since 2020 and its lowest level since Donald Trump won the presidential election in November.
Although shares bounced back slightly after Tuesday’s presidential plug for Tesla cars, closing around $235, they’ve been in freefall since their mid-December 2024 highs of over $435. Robert Scott, an international economics and trade policy specialist, said a fall was inevitable due to Tesla’s “extreme overvaluation.” William Lee, chief economist at the Milken Institute, pointed to delays in launching new Tesla products as another factor. Tesla sales have plunged in key markets.
According to Business Insider, sales in Germany were down 76 percent in February compared to the previous year, despite a general rise in electric vehicle sales. Sales also dropped significantly in Norway, Denmark, Sweden, France, the UK, Portugal, China, and Australia. Increased competition from traditional automakers and new electric vehicle companies is a major reason for the sales decline.
Tesla struggles as Musk is distracted
For example, China’s BYD reported a 90 percent rise in sales in February. Tesla has repeatedly slashed vehicle prices to maintain demand, which has boosted short-term sales but reduced overall earnings.
This has investors worried about long-term profitability. Musk’s political activities, including his role in the Department of Government Efficiency (DOGE) which aims to cut federal government waste, have angered some people. This has led to protests and even arson attacks at Tesla dealerships and factories.
While President Trump does not directly influence Tesla’s struggles, his policies and sway over Musk could have major impacts. Trump has opposed subsidies for electric vehicle makers and emissions regulations that benefit companies like Tesla. His tariffs on countries like China, a crucial export market for Tesla, could disrupt its supply chain.
As Musk juggles his political and business interests, pressure is mounting on Tesla to deliver innovations and boost its market performance amid tough competition and a volatile economy.
Image Credits: Photo by Tesla Fans Schweiz on Unsplash
