Tesla Faces Stock Plunge Amid Sales Decline and Political Controversy
Tesla stock took a nosedive on Monday, plummeting to levels unseen since before Election Day. The downturn reflects concerns over dwindling sales and growing unrest regarding CEO Elon Musk’s prominent political engagement.
During afternoon trading, shares of the electric vehicle giant fell by over 13% in just one day, marking a greater than 50% decline from a peak happening in mid-December. This drop is significantly larger than the S&P 500’s decline of 2.5% for that day.
The dramatic surge in Tesla’s stock post-Donald J. Trump’s presidential election and Musk’s unofficial role as a government efficiency czar has vanished, wiping out more than $700 billion in market value.
Initially, investors were optimistic about Musk’s financial contributions to Trump’s campaign and his connections within the White House. They believed these factors would ease regulatory challenges, potentially boosting Tesla’s autonomous driving tech initiatives.
However, Musk’s strong presence in the political arena has turned into a hindrance. Concerns are mounting among investors that Musk is not dedicating adequate attention to Tesla’s operations as vehicle sales drop.
Tesla is increasingly becoming the focus of fervent protests by those upset over Musk’s leadership in job cuts affecting park rangers and civil servants alongside reduction in foreign aid and other programs.
Recently, tensions escalated with incidents such as the arson of Tesla charging facilities near Boston, gunfire at an Oregon Tesla dealership, and arrests during a peaceful protest at a Tesla showroom in Lower Manhattan.
The political backlash has contributed to substantial drops in sales figures across Europe last month, with a staggering 76% sales decline in Germany, Europe’s largest automotive market. Musk’s support for far-right European parties, including in Germany, exacerbates the situation. Analysts also note a dearth of new models and mounting competition as factors.
In January, Volkswagen outpaced Tesla in electric vehicle sales outside China, according to SNE Research based in South Korea.
While Tesla might fare better than other automakers amid trade tensions spurred by Trump, the company still faces risks from souring relations with China, home to Tesla’s biggest manufacturing facility in Shanghai, which supplies vehicles for both the Chinese market and export to Europe and beyond.