Tesla's market turmoil: Musk's politics and sales slump
Tesla is experiencing significant stock market losses. The company's market value has fallen below one trillion dollars, and its stock price has dropped by over 8%, marking the lowest level since early November 2024. The situation is influenced by weak sales performance and controversies surrounding Elon Musk's political activities.
Since the beginning of the year, Tesla's shares have lost 25% of their value, while the Nasdaq index has fallen by merely 1.5% during the same period. Compared to the record level on 16 December 2024, the stock price of the electric vehicle manufacturer has decreased by more than 35%. Elon Musk's net worth has declined by over 100 billion dollars during this period, although he remains the wealthiest person globally, with an estimated fortune of around 380 billion dollars.
The latest stock price decline occurred after a Reuters report stated that Tesla had disappointed customers in China with the long-awaited update to its semi-autonomous driving system. Users complained that the "city streets navigation" feature does not meet Musk's promises regarding self-driving technology.
Competing electric vehicle manufacturers in China, such as BYD, offer their driver assistance systems for free or at a significantly lower price. Xiaomi's SU7 model includes technology similar to the standard without additional charges.
Business problems and political involvement
In the fourth quarter of 2024, Tesla recorded results below analysts' expectations. Automotive revenue fell 8% compared to the previous year, and operating profit decreased 23%. The company attributes this to lower average selling prices of its ageing model range.
Another source of concern for investors is Elon Musk's involvement in politics. As the head of the Department of Government Efficiency (DOGE) in President Trump's administration, he had unprecedented access to government computer systems and taxpayer data. Musk contributed $290 million to Trump's election campaign.
Musk's controversial political rhetoric led to protests by opponents in various locations, including outside Tesla showrooms and service centres. The stock price also fell after Trump announced plans to impose high tariffs on goods from Canada, Mexico, and China, which coincided with a drop in Tesla vehicle registrations in Europe in January and February 2025.
Are customers turning away from Musk?
What is causing the stock market declines? Tesla experienced significant sales declines at the beginning of 2025. According to ACEA data, 10,511 new vehicles of this brand were registered in Europe in January, representing a 46% drop compared to January 2024. Interest in all models decreased by at least 36%.
American analysts from Kalshi predict the worst quarter for Tesla in almost three years. They estimate that the company will deliver around 360,000 vehicles in the current quarter, a significant drop from earlier periods when quarterly deliveries reached 500,000 cars.
Reasons for the brand's declining popularity
One of the main reasons for the declining interest in the brand is Elon Musk's controversial activities and political involvement alongside President Donald Trump. Recently, there have been protests in the United States against the head of Tesla. A survey conducted by Electrifying.com showed that 59% of Britons surveyed would not consider buying a Tesla precisely because of Musk's actions.
An important factor is growing competition from European and Chinese electric car manufacturers. Additionally, Tesla's current model range is outdated. The Model S debuted in 2012, and the Model X no longer generated the same excitement as before. Despite recent upgrades to the Model 3 and Model Y, the company has not introduced any new vehicles to its lineup.
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