Tesla stock (TSLA), which has been a major decline for the last few months since the new administration began, is causing a lot of discussion.
Tesla’s stock price rose 92% after the presidential election of 2024, reaching a high of $483.99 in December. The stock began to decline in the weeks leading up to inauguration day, and closed at $426.50 the final trading day. Since the new government took over, this decline has increased. On Wednesday, the stock closed at $336.51, a 20% drop.
Tesla Performance: What it Means
Tesla’s position among the most widely held stocks globally, coupled with its strong performance in recent years, has earned it a place within the “Magnificent Seven”—a group including Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), and Nvidia (NVDA). Tesla shares have an impact on S&P 500’s performance.
Elon Musk‘s wealth, as the CEO of Tesla and its largest shareholder, is also closely linked to the performance of the stock. Recent stock price drops have resulted in an enormous drop in Elon Musk’s net worth.
Tesla Stock Drop: Factors contributing to its drop
Tesla’s performance in the last month has been below that of other Magnificent Seven firms, despite Nvidia’s dramatic decline in response to DeepSeek fears in late January. Tesla has not met expectations with recent Tesla sales, especially on international markets.
The Kraftfahrt-Bundesamt in Germany reported that Tesla registrations had decreased by 60% from January of last year. Sales in France also experienced a drop of 63% over the same time period.
In the U.K., sales of electric vehicles in January were at a record high. However, there was a less dramatic decline (12%).
According to Electrek this trend continues across Europe. Tesla’s registrations in Norway, Sweden, Denmark and the Netherlands have dropped by over 40%. Spain was the country that saw the biggest decline.
Electric Vehicle Council Australia reports a decrease of 33% on yearly basis in Tesla sales for January. According to China Passenger Car Association, Tesla’s second largest market saw sales drop 11% from last year and 33% in December.
Tesla’s results for the fourth quarter, which were released late in January, missed analyst expectations as well. The overall revenue was slightly higher, but operating income dropped by 23 percent year-overyear. It now stands at $1.6 billion. Tesla delivered 1.8 millions vehicles in 2018, the lowest number in its history. This reflects the difficulties in continuing the company’s growth.
What are the potential impacts of new trade policies?
Analysts suggest the performance of the stock may be affected by the trading strategies of the newly elected administration. The stock’s performance is not as good as analysts had predicted, despite their previous claims that his policy could lead to positive regulatory changes for the electric car industry.
Recent executive orders signed by the president imposed a 25% duty on steel and aluminum imported into the U.S. Tesla uses these materials to manufacture its vehicle chassis and body.
Investors worry about Tesla’s future operations as duties are now in place on Chinese imports. Nikkei Asia’s 2023 report states that Chinese companies provide nearly 40% of materials for Tesla’s electric vehicle batteries.
Elon Musk’s influence and potential distractions
Elon Musk, the Department of Government Efficiency’s (DOGE) Director and a strong supporter of the broader policy of the Administration has become a major figure.
Investors might perceive DOGE as a distraction, along with Musk’s other activities. Due to the association between the CEO of the company and its brand, it may discourage some potential customers. This includes Democrats. According to a Gallup survey from 2023, Democrats were more likely than Republicans to purchase electric vehicles.
Musk’s involvement in European politics—supporting far-right parties in Germany and the U.K.—could also affect sales. According to a survey conducted by Electrifying.com in recent months, more than half (59%) car buyers from the U.K. are less likely to purchase a Tesla as a result of Musk’s political actions.
Experts’ Opinions
Ginny BuckleyElon Musk is the CEO of Electrifying.com. He stated: “Tesla’s brand appears to be heavily tied to Tesla. This pushes away many potential buyers.”
Stifel analyst Stephen Gengaro The views of Elon Musk, the CEO, have “potentially led to”[ed] In a tailwind to sales.
Ben NelmesArgus Media quoted, the chief executive at NewAutoMotive as saying that Tesla’s problems could be due to the fact “that it hasn’t launched a new model since the Model Y while its rivals have been playing catch up.”
Analysts predict that Tesla and Apple may receive an exemption from China tariffs. They also expect Musk to have a major role in China tariff negotiations in 2025.
The Future
Although it decreased over the last month, the share price rose by 70% in just six months. This raises the question of how long will the decline continue.
Tesla is facing a number of obstacles. Along with potential new trade policies and Elon Musk’s participation in the administration. It also faces competition which threatens to undermine its leadership position in electric cars. Tesla faces competition from companies developing autonomous driving technology.
BYD (a Chinese electric car manufacturer) has recently launched a self driving system across all of its models. It may be a sign that Tesla’s competitors are gaining ground. Tesla hopes to retain its leadership in the race towards autonomous driving.