Tesla Inc. has seen a significant drop in its market value as shares tumbled on Tuesday, bringing the company's valuation below the $1 trillion mark. The decline follows weak sales performance in Europe and increasing political controversies surrounding CEO Elon Musk.
Sales Slump in Europe
Tesla’s European sales took a sharp downturn last month, with the company selling fewer than 10,000 units—a 45% decline compared to the same period last year. This drop comes as Tesla faces mounting competition from established automakers and emerging electric vehicle (EV) manufacturers.
Stock Market Impact
Tesla’s stock plummeted by 8.4%, closing at $302.80 per share. The sharp decline wiped out approximately $89 billion from the company's market capitalization. Analysts attribute this drop to a combination of poor sales figures and investor concerns over Musk’s increasing involvement in political affairs.
Musk’s Political Involvement
Elon Musk has recently taken on an advisory role in President Donald Trump’s administration, where he is tasked with government spending cuts. His vocal support for far-right political figures in Europe, particularly in Germany, has sparked controversy, leading some analysts to believe that Tesla’s brand image is being affected in key markets.
According to Wedbush Securities analyst Dan Ives, Musk’s political affiliations have added to the company's existing challenges. "Tesla is clearly facing difficulties in Europe, and Musk’s political stance is exacerbating the situation. We estimate that 10-15% of these challenges stem from negative sentiment toward Musk himself," Ives noted.
Investor Sentiment and Global Competition
Following the 2024 U.S. presidential election, Tesla’s stock initially surged as investors anticipated that Musk’s ties to Trump could provide regulatory advantages. However, recent sales figures suggest that the political alignment may not be beneficial in international markets, particularly in Europe.
In addition to these hurdles, Tesla faces strong competition from Chinese automaker BYD, which continues to expand its global footprint. Tesla recently announced plans to introduce advanced self-driving features in China, just as BYD revealed its intention to implement self-driving technology across most of its vehicle lineup.
Looking Ahead
While Tesla remains a dominant player in the EV sector, the recent stock decline underscores growing concerns over its European market strategy and Musk’s political entanglements. Investors will be closely watching the company's next moves to see if it can recover lost ground and regain confidence in the global market.
