Tesla's shares decreased by over 9% as European sales fell by almost 50% in January, pushing the company’s market valuation below $1 trillion for the first time since November 2024. With increased competition from Chinese manufacturers and Musk's polarizing political activities, analysts suggest these elements may contribute to the electric vehicle maker's faltering sales during a period of overall growth in the European market.
Tesla Stocks Plummet Amid Declining European Sales and Controversial Political Stance
Tesla Stocks Plummet Amid Declining European Sales and Controversial Political Stance
Tesla's share value has taken a significant hit following a dramatic drop in sales across the EU and UK, with analysts attributing the downturn to heightened competition and political controversies surrounding CEO Elon Musk.
Tesla's shares have experienced a steep decline of more than 9%, following reports of a significant slump in sales across Europe and the UK, where sales fell by nearly half in January. This drop has seen the company’s market valuation fall below the $1 trillion mark for the first time since November 2024.
The decline in Tesla sales contrasts sharply with the overall trend in the European electric vehicle market, which saw sales increase by over a third in the same month, as reported by the European Automobile Manufacturers Association (ACEA). Tesla's sales plummeted over 45% in the EU, and more than 50% when including the UK.
Industry analysts, including AJ Bell investment director Russ Mould, believe fierce competition from Chinese manufacturers like BYD—who offer advanced features at no additional cost—has played a critical role in Tesla’s sales decrease. However, Mould also noted that some consumers might be choosing to distance themselves from Tesla due to Musk's controversial political affiliations.
Musk's actions have stirred controversy on both sides of the Atlantic, from his support of far-right political figures in the UK and Germany to his conflicting positions regarding U.S. politics, including management of federal funds related to clean energy. His historically close relationship with Donald Trump has also come under scrutiny, particularly since Trump's administration has not prioritized electric vehicle promotion.
Additional factors affecting Tesla’s performance include concerns over potential interest rate adjustments and the uncertain implications of Trump's trade policies. Analysts agree that these intertwined political and economic dynamics have left Tesla looking vulnerable in a rapidly evolving market landscape.
