Tesla Shares Plummet as European Sales Decline Sharply

Tesla's shares fell over 9% following a nearly 50% drop in sales in the European market. The decline is attributed to heightened competition from brands like BYD and political controversies tied to Elon Musk's public statements. This downturn marks a worrying trend for Tesla, as it grapples with market challenges and shifting investor sentiment.

Tesla's electric car sales recently took a significant hit, causing shares to tumble over 9%. The slump corresponds with a strong sales performance for electric vehicles in the EU and UK overall, which saw growth exceeding 30% in January, according to figures from the European Automobile Manufacturers Association (ACEA). However, Tesla's sales plummeted by more than 45% across the EU, EFTA, and UK, surpassing a 50% decline specifically within the EU alone.

Following this latest drop, Tesla's valuation dipped beneath the $1 trillion mark for the first time since November 2024. Analysts suggest that increased competition, particularly from Chinese automaker BYD, is substantially impacting Tesla's sales. BYD has garnered attention for offering features standard that are typically charged as extras by other manufacturers.

In addition to market competition, Tesla's CEO Elon Musk has been embroiled in various political controversies, which may also be influencing consumer sentiment. According to AJ Bell's investment director, Russ Mould, some consumers might be opting to stear clear of the brand due to Musk's strained relationships with political figures and his support of contentious causes.

Musk's engagements have included controversial commentary on U.S. funding for electric vehicle development and support for far-right political figures. In the UK, he has expressed support for jailed activist Stephen Yaxley-Lennon, known as Tommy Robinson, and has been critical of Prime Minister Sir Keir Starmer. In Germany, Musk has indicated his approval of the far-right AfD party, extending a complex political narrative that may alienate potential buyers.

Investors had previously shown optimism regarding Tesla’s future due to Musk's closeness with Donald Trump. However, Trump, who has made statements against the promotion of electric vehicles, now casts a shadow over this optimism, highlighting an incongruence in the market's expectations regarding Tesla's growth. Mould pointed out that ongoing market volatility regarding interest rates and tariffs might also play a part in the overall decline of Tesla's stock.