Tesla’s Market Cap Falls Below $1 Trillion as Sales Decline and Elon Musk’s Politics Spark Controversy.
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Sales in major markets are tanking as Elon Musk’s politics push away some buyers.
Tesla (TSLA) has seen a significant slide in its stock value, with its market capitalization dipping below $1 trillion. The electric vehicle (EV) giant has been facing a series of setbacks, including declining sales in major markets and CEO Elon Musk’s polarizing political involvement, which appears to be pushing away some buyers.
Stock Performance and Market Reaction
Tesla’s stock closed at $302.80 per share on Tuesday, marking a staggering 37% drop from its December peak of $479.86. This is the lowest closing price since November 7, just two days after the U.S. presidential election. Although shares rebounded slightly by over 1% in early trading on Wednesday, many investors remain cautious as they reassess Tesla’s growth trajectory.
Plummeting Sales in Key Markets
Tesla’s struggles are evident in global sales figures. The European Automobile Manufacturers’ Association reported a 45% decline in Tesla’s sales across Europe in January, despite a surge in the region’s EV market. Meanwhile, in California—Tesla’s largest domestic market—new vehicle registrations fell by 11.6% in 2024, according to the California New Car Dealers Association. The association noted in April that Californians’ enthusiasm for Tesla may have peaked.
Elon Musk’s Politics: A Brand Liability?
Elon Musk’s increasing political activism has emerged as a key factor influencing Tesla’s declining brand reputation and sales. Following his strong financial support for Donald Trump’s presidential campaign, Musk has remained a visible presence in Washington, frequently engaging with the administration through his role in the Department of Government Efficiency. Although officially led by another appointee, Musk has become the department’s public face, advocating for aggressive cost-cutting measures within federal agencies, including those that regulate Tesla.
Additionally, Musk’s endorsement of Germany’s far-right Alternative for Germany (AfD) party and involvement in online campaigns supporting controversial figures like British far-right activist Tommy Robinson have fueled consumer backlash. These political moves have reportedly cost Tesla an estimated $15 billion in brand value, according to Brand Finance.
Competitive Pressures and Product Challenges
Beyond political concerns, Tesla’s aging product lineup and increased competition are also impacting its market position. In China—the world’s largest EV market—Tesla’s latest push for autonomous driving features has received mixed reactions. Rival automakers like BYD and Xiaomi are offering advanced driver-assist technology at lower prices, drawing consumers away from Tesla’s premium-priced offerings. Xiaomi’s SU7, for instance, has been a major success, offering cutting-edge features for free.
Tesla’s fourth-quarter earnings also failed to meet analysts’ expectations, with vehicle deliveries narrowly missing internal targets for the year. Musk, however, remains optimistic, predicting a “return to growth” in 2025.
What’s Next for Tesla?
To regain momentum, Tesla is banking on the revamped Model Y SUV, its best-selling vehicle, alongside new autonomous technology initiatives. The company is also preparing to launch a Tesla ride-share service later this year, utilizing Model Y and Model 3 vehicles equipped with self-driving software. Additionally, Tesla is doubling down on its AI-driven Optimus humanoid robots, hoping to expand its footprint beyond the automotive sector.
Final Thoughts
Tesla’s future remains uncertain as it navigates political controversies, increased competition, and product stagnation. While the company’s loyal investor base continues to believe in Musk’s vision, the shifting consumer landscape may require Tesla to recalibrate its strategy to maintain its dominance in the EV market.
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