Tesla stock fell 6.3% on Tuesday, weighed down by disappointing sales, rising competition, and renewed financial concerns. The stock has been in decline since the start of 2025, following a major rally in late 2024.
Weak Sales in Europe Hit Investor Confidence
Tesla’s latest sales numbers in Europe have shaken investor confidence. The EV giant faces mounting challenges, including falling sales, shrinking margins, and weakening brand loyalty, particularly in key markets like Germany, where demand has dropped by over 60%. ⁽¹⁾
Analysts attribute part of this decline to CEO Elon Musk’s political controversies, which have alienated some core customers.
Tesla is banking on a self-driving robotaxi launch in June to revive growth, but scepticism remains high given increasing competition and regulatory hurdles. ⁽²⁾
Rising Competition from BYD
Chinese EV giant BYD, Tesla’s biggest rival, is adding pressure. BYD recently announced a new driver-assistance system powered by DeepSeek’s AI, which will be available on most models, including low-cost EVs priced under $10,000. ⁽³⁾
Meanwhile, Tesla continues to face delays in securing regulatory approval for its driver-supervised autonomous driving software in China. ⁽⁴⁾
Financial Instability and Weak Earnings
Tesla’s financial outlook has also raised alarms. CEO Elon Musk’s $97 billion bid for OpenAI has sparked concerns about his divided focus and Tesla’s financial stability.
Investors recall the impact of his Twitter acquisition, which led to a major sell-off in Tesla shares. Adding to concerns, Musk’s brother and Tesla board member, Kimbal Musk, sold $27 million worth of Tesla shares on February 6, 2025, fueling speculation about internal confidence. ⁽⁵⁾
Analysts warn that his growing list of distractions including running Tesla, SpaceX, and his new position in the Trump administration could weigh on Tesla’s long-term outlook.
Tesla’s Q4 2024 earnings and revenue fell short of analysts’ expectations.
- EPS: $0.73 (vs. $0.76 expected)
- Revenue: $25.71 billion (vs. $27.26 billion expected)
- Automotive revenue: $19.8 billion, down 8% YoY, due to price cuts across its vehicle lineup. ⁽⁶⁾
- Operating income: $1.6 billion, down 23%, pressured by lower average selling prices.
- Regulatory credits: Contributed $692 million, highlighting continued reliance on non-core revenue streams. ⁽⁷⁾
Sentiment and Outlook
Analysts have mixed views on Tesla’s future. Analysts at Stifel investment bank recently lowered their price target from $492 to $474 ⁽⁸⁾, caused by mixed fourth-quarter results and negative public sentiment. Concerns about CEO Elon Musk’s political involvement could also harm Tesla’s reputation. ⁽⁹⁾
Despite these challenges, other analysts are optimistic on Tesla’s future, citing advancements in autonomous driving, new vehicle launches, and potential developments like the Optimus humanoid robot. Elon Musk remains confident on strong growth for 2025, but uncertainties related to leadership decisions and external factors will continue to influence the company’s stock performance. (10)
