Tesla stock has been caught up in a major sell-off since the start of the year, dropping from its all-time high of $480 in December 2024. Tesla has erased its post-election gain as CEO Elon Musk has shifted his focus more to politics, where he is managing DOGE, a department specialized in reducing federal spending.
Tesla stock is also facing struggles with demand and delivery concerns, weak earnings and economic changes.
Source: Trading view
Poor Financials Damage TSLA
Over the past three months, Tesla’s stock declined more than 50%, bringing its market cap down from $1.5 trillion to approximately $845 billion.
The sharp decline reflects a combination of deteriorating financial performance, demand slowdowns, and negative market sentiment. Investors have grown increasingly cautious about Tesla’s ability to maintain its leadership in the EV space amid rising competitive threats. ⁽¹⁾
For its Q4 2024 earnings, Tesla came in short in both revenue and EPS. Revenue came in at $25.7 billion, less than the $27.2 billion expected, while EPS came in at $0.73, less than the $0.75 expected from analysts. ⁽²⁾
On Monday, UBS analysts maintained their “sell” rating, lowered their price target to $225 from $259, and cut their estimates for first-quarter deliveries to 367,000 from 437,000 previously. ⁽³⁾
Declining Deliveries and Market Position
Tesla recorded an annual global sales decline, where new vehicle registration in Germany dropped by 76.3% in February 2025. The decline in numbers bring more concerns that competitors in EV are increasing in Europe, which might be a threat to Tesla’s dominant position. ⁽⁴⁾
Investors are also concerned about slow sales in China and the impact of President Trump’s tariffs on Canada, Mexico, and China.
Political Controversies
Tesla CEO Musk has sparked controversies due to his role in DOGE and recent actions that caused criticism. Investors are worried that Elon Musk has shifted his focus to politics rather than Tesla. ⁽⁵⁾
Musk was also exposed to criticism sparking due to recent his comments stating that Ukraine’s wealthy elite need to be sanctioned as a means to end the war with Russia, emphasizing his role in supporting Ukraine’s military through Starlink.
He further advocated for the US to exit NATO, sparking investor concerns and raising doubts about America’s commitment to European defense. ⁽⁶⁾
Tesla’s Response
To regain its position as a dominant figure, Tesla is focused on launching a new low-cost EV model. With a tight production deadline of almost four months, this move could be a game changer for Tesla to regain its market position in the EV industry.
The push for more affordable vehicles comes as Tesla faces pricing pressure from Chinese EV manufacturers such as BYD, which have been gaining growing attention from investors. ⁽⁷⁾
