The company’s stock value dips below $1 trillion for the first time in nearly two years as concerns over competition and political controversies arise.
Tesla Shares Decline Following Significant Sales Drop in Europe
Tesla Shares Decline Following Significant Sales Drop in Europe
Electric vehicle maker faces tough competition as sales plunge in January.
Tesla shares have plummeted over 9% following a steep decline in sales across Europe and the UK, with figures revealing a drop of nearly 50% for January. This decline has pushed Tesla's valuation below the $1 trillion mark for the first time since November 2024. The company is grappling with fierce competition from Chinese automotive manufacturers and others, exacerbating the issue.
In stark contrast to the growth seen in the European electric vehicle market, which experienced over a 33% increase in sales, Tesla's performance faltered with a staggering 45% decrease in sales across the EU, EFTA, and the UK, and a shocking 50% decline solely within the EU. This downturn follows a trend established in the previous year, which saw Tesla's sales drop for the first time in over a decade, attributed mainly to heightened competition.
Investment director Russ Mould from AJ Bell pointed to increasing competition as a primary contributor to the sales slump. Chinese automaker BYD has gained traction by offering standard features that other manufacturers charge extra for, further impacting Tesla's positioning in the market.
Moreover, political actions taken by Tesla’s owner, Elon Musk, have raised eyebrows and arguably diluted consumer support. His contentious political stances, particularly in the US—including his cuts to development funds and hostile remarks towards UK Prime Minister Sir Keir Starmer—are leading some consumers to possibly take a "principled stand" against his political affiliations, according to Mould.
Musk has also shown support for far-right political figures and parties in the UK and Germany, raising questions about their potential effects on the brand's image in Europe. While Musk's relationship with Donald Trump initially seemed like a boon for Tesla—perceived to bolster investor confidence—the former president's lack of support for electric vehicles poses new challenges, particularly as he threatens to dismantle initiatives boosting electric vehicle ownership.
In addition to these factors, general market anxiety surrounding potential interest rate cuts and speculation over Trump’s trade policy has added to investors’ unease, resulting in Tesla’s significant share decline and raising concerns about the company's future in a swiftly evolving market.
In stark contrast to the growth seen in the European electric vehicle market, which experienced over a 33% increase in sales, Tesla's performance faltered with a staggering 45% decrease in sales across the EU, EFTA, and the UK, and a shocking 50% decline solely within the EU. This downturn follows a trend established in the previous year, which saw Tesla's sales drop for the first time in over a decade, attributed mainly to heightened competition.
Investment director Russ Mould from AJ Bell pointed to increasing competition as a primary contributor to the sales slump. Chinese automaker BYD has gained traction by offering standard features that other manufacturers charge extra for, further impacting Tesla's positioning in the market.
Moreover, political actions taken by Tesla’s owner, Elon Musk, have raised eyebrows and arguably diluted consumer support. His contentious political stances, particularly in the US—including his cuts to development funds and hostile remarks towards UK Prime Minister Sir Keir Starmer—are leading some consumers to possibly take a "principled stand" against his political affiliations, according to Mould.
Musk has also shown support for far-right political figures and parties in the UK and Germany, raising questions about their potential effects on the brand's image in Europe. While Musk's relationship with Donald Trump initially seemed like a boon for Tesla—perceived to bolster investor confidence—the former president's lack of support for electric vehicles poses new challenges, particularly as he threatens to dismantle initiatives boosting electric vehicle ownership.
In addition to these factors, general market anxiety surrounding potential interest rate cuts and speculation over Trump’s trade policy has added to investors’ unease, resulting in Tesla’s significant share decline and raising concerns about the company's future in a swiftly evolving market.
