Flagging global sales and Elon Musk\u2019s increasingly outspoken political activities are combining to rock the value of Tesla.<\/p>\n
Shares in the once-trillion-dollar company saw their worst day in five years this week. Year to date, Tesla\u2019s stock has plunged 36% \u2014 though it is still up by some 54% over the past 12 months.<\/p>\n
For Musk, Tesla\u2019s shares remain his primary source of paper wealth, though he has also turned his stake in SpaceX into a personal lending tool. But it was proceeds from selling Tesla shares that helped Musk complete his acquisition of Twitter, now known as X.<\/p>\n
Musk\u2019s wealth also allowed him to help vault Donald Trump into a second presidential term. Even as Musk\u2019s net worth has diminished as a result of Tesla\u2019s recent share-price declines, data suggests he is in no danger of losing his title as the world\u2019s wealthiest person.<\/p>\n
Musk has said on X that he is not concerned about Tesla\u2019s recent drop in value. Still, evidence suggests the company is entering a period of transition.<\/p>\n
A spokesperson for Tesla did not respond to a request for comment.<\/p>\n
Musk\u2019s wealth has propelled him to a global presence that lacks precedent \u2014 and has polarized world opinion about the tech entrepreneur in the process. Any weakening of his financial position, therefore, could undercut his influence in the political and tech spaces where he now commands outsize attention.According to Bank of America, Tesla\u2019s European sales plummeted by about 50% in January compared with the same month a year prior.<\/p>\n
Some say this is attributable to a growing distaste for Musk, who has begun dabbling in the continent\u2019s politics in the wake of his successful support of Trump\u2019s candidacy last year.<\/p>\n
Others note Tesla\u2019s European market is facing increased competition from the Chinese electric-vehicle maker BYD, which has telegraphed ambitious plans for expansion on the continent.\u00a0\u00a0<\/p>\n
A more decisive blow to Tesla\u2019s near-term fortunes may be emanating from China itself. There, Tesla\u2019s shipments plunged 49% in February from a year earlier, to just 30,688 vehicles, according to official data cited by Bloomberg News. That\u2019s the lowest monthly figure registered since July 2022 \u2014 amid the throes of Covid-19 \u2014 when it shipped just 28,217 EVs, Bloomberg said.<\/p>\n
Donald Trump accompanied by Elon Musk speaks Tuesday next to a Tesla Model S on the South Lawn of the White House.<\/span>Andrew Harnik \/ Getty Images<\/span><\/p>\n Tesla is now facing intense competition from other Chinese EV makers, including BYD.<\/p>\n Yet even there, a Chinese official also warned about the impact of Musk\u2019s high-profile politicking.<\/p>\n \u201cAs a successful businessman, one should be embracing 100% of the market: Treat everyone nicely, and everyone will be nice in return,\u201d the secretary of China\u2019s Passenger Car Association, said in a briefing Monday, Bloomberg reported. \u201cBut if you look at it in terms of voting, then half of voters will be friendly to you and half of them won\u2019t be.\u201d<\/p>\n \u201cThis is the unavoidable risk that\u2019s come after he got his personal glory,\u201d the secretary, Cui Dongshu, said Monday, referring to Musk.<\/p>\n On Friday, Reuters reported Tesla was planning to sell a Model Y costing at least 20% less to produce to defend its China share.<\/p>\n And in the U.S., Tesla\u2019s January sales were down about 11%, according to data from the S&P Global analytics group \u2014 an outlier at a time when EV sales for all other brands are trending higher in America.<\/p>\n Though he has long worn multiple proverbial hats, Musk\u2019s role in the White House as nominal head of the Department of Government Efficiency may be his most consequential. And having influence with the Trump administration could be critical to Tesla\u2019s fortunes. This week, Trump promised he would purchase a Tesla in a showy presentation on the White House lawn, seemingly further cementing the Trump-Musk alliance.<\/p>\n On X \u2014 the social media platform he owns \u2014 Musk\u2019s frenetic posting is increasingly focused on politics and America\u2019s culture wars, with an occasional nod to SpaceX launches.<\/p>\n His apparently undiminished role in the Trump administration \u2014\u00a0he was seen leaving the White House last weekend alongside Commerce Secretary Howard Lutnick \u2014 has sparked boycotts in Europe, as well as protests and even acts of vandalism against auto owners in the U.S.<\/p>\n \u201cWhen people\u2019s cars are in jeopardy of being keyed or set on fire out there, even people who support Musk or are indifferent to Musk might think twice about buying a Tesla,\u201d Ben Kallo, an analyst at Baird, told CNBC\u2019s \u201cSquawk on the Street\u201d on Monday.<\/p>\n In a note to clients this week downgrading its estimate of deliveries, analysts with JPMorgan said the damage to Tesla\u2019s brand has been serious.<\/p>\n \u201cWe struggle to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly,\u201d they wrote.<\/p>\n Tesla itself is warning about the fallout from retaliatory measures taken by countries targeted by Trump\u2019s tariffs, saying in a letter to the U.S. trade representative this week that the company may be \u201cexposed to disproportionate impacts when other countries respond to US trade actions.\u201d<\/p>\n Already, the Canadian province of British Columbia has announced it was ending subsidies for Tesla\u2019s products.<\/p>\n For all the oxygen Musk has taken up with his political activities, concerns about Tesla products themselves are equally keeping investors and analysts up at night.<\/p>\n Musk has \u201cneglect[ed] the rest of Tesla\u2019s automotive business as he thought that by the end of every year for the last 6 years, Tesla would be able to flip a switch and make all its vehicles self-driving \u2014 automatically increasing their value and making them infinitely more competitive than other vehicles,\u201d Fred Lambert, who covers the company for the Electrek electric vehicle blog, wrote in a recent post.<\/p>\n Meanwhile, Musk decided to kill Tesla\u2019s cheaper, $25,000 model while going all-in on the Cybertruck, whose sales have yet to take off, Lambert said.<\/p>\n \u201cTesla\u2019s core business remains selling cars and batteries,\u201d he wrote. \u201cThere\u2019s no doubt that the business of selling cars is not going well for Tesla right now, and under Musk, there\u2019s no clear path to improvement.\u201d<\/p>\n By contrast, many analysts continue to take a much longer view of Tesla\u2019s outlook. In his most recent note to clients about the company, Morgan Stanley analyst Adam Jonas, one of the most closely watched observers of Tesla, summarized the long-term outlook that he says continues to justify the company\u2019s eye-watering valuation.<\/p>\n \u201cTesla\u2019s softer auto deliveries are emblematic of a company in the transition from an automotive \u2018pure play\u2019 to a highly diversified play on AI and robotics,\u201d he wrote in a note March 2.<\/p>\n While that was before the most recent sell-off intensified, Jonas said he was already discounting market gyrations.<\/p>\n \u201cWhile the journey may be volatile and non-linear, we believe 2025 will be a year where investors will continue to appreciate and value these existing and nascent industries of embodied AI where we believe Tesla has established a material competitive advantage,\u201d he wrote.<\/p>\n <\/p>\n Flagging global sales and Elon Musk\u2019s increasingly outspoken political activities are combining to rock the value of Tesla. Shares in the once-trillion-dollar company saw their worst day in five years this week. Year to date, Tesla\u2019s stock has plunged 36% \u2014 though it is still up by some 54% over the past 12 months. 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