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Tesla shares plunge as European sales slump and Musk stirs more controversy

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Max McDee, 27 February 2025

Tesla

Tesla's stock has taken a significant hit, falling from its $479.80 high in December back to levels we last saw in November 2024 and pushing the company's valuation below $1 trillion. This sharp decline follows a dramatic drop in European sales, especially in the EU and the UK, where Tesla saw sales plummet by nearly half in January.

The European market has become a battleground for electric cars, with Chinese manufacturers like BYD making big gains. These competitors often offer features as standard that Tesla charges extra for, attracting budget-conscious consumers. But that's just one part of a much bigger picture.

Tesla shares plunge as European sales slump and Musk's politics stir controversy

The sales slump isn't purely because of the market competition. Elon Musk, Tesla's CEO, has suddenly become vocal about his political views and they are stirring quite a lot of controversy on both sides of the Atlantic. His support for far-right figures and parties in the UK and Germany, coupled with his involvement in US political debates, seems to have alienated many potential buyers.

January's sales figures present a stark contrast to the overall growth of the European electric car market, which saw a rise of over a third. Tesla's sales fell by more than 45% in the EU, EFTA, and the UK combined, and over 50% in the EU alone. This decline follows a year in which Tesla saw its first annual sales drop in over a decade.

Analysts suggest that Musk's political interventions are playing a role in the company's struggles as some customers choose to boycott Tesla. A former senior director of Tesla's Europe, Middle East, and Asia division acknowledged that Musk's "flirting with the right in politics" and public appearances are negatively impacting the company's image. While his political stances may attract a specific audience, they are not the typical EV buyers.

Tesla shares plunge as European sales slump and Musk's politics stir controversy

The initial valuation boost Tesla received following the US election, due to Musk's relationship with the current president, has quickly faded as the president's stance against electric vehicles becomes clearer. As Musk himself predicted, the stock is being "crushed like a souffle being smashed by a sledgehammer" due to a lack of profit growth.

None of the drama stops Tesla from trying to navigate the rough waters. The recent launch of a new Full Self-Driving (FSD) update in China offers a glimmer of hope, although its reception has been mixed. This update has the potential to give Tesla the financial boost it desperately needs as it faces an uphill battle to regain its footing.

Via

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Reader comments

S
  • Sinnaoi
  • n22
  • 04 Mar 2025

Thank you for supporting my case that market cap has less to do with line-up and competition and far more with Investor trust and expectations. Exactly what my message was saying.

  • Reply
?
  • Anonymous
  • JE$
  • 03 Mar 2025

BTW, If the sales drop then what? Will It make your upcoming days happy and full of sunshine or what?

  • Reply
?
  • Anonymous
  • JE$
  • 03 Mar 2025

And If It doesn't happen you will commit seppuku.

  • Reply
  • Read all comments
  • Post your comment
Total reader comments: 9

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