Tesla’s shares have plunged by over 9% following a significant drop in EU and UK sales, which fell by nearly half in January.
This decline pushed Tesla’s valuation below $1 trillion for the first time since November 2024.
The electric car maker has been grappling with intense competition in the European market, particularly from Chinese and other manufacturers.
Additionally, Tesla’s CEO, Elon Musk, has sparked political controversy on both sides of the Atlantic, according to analysts.
While overall European electric car sales grew by more than a third in January, as reported by trade body Acea, Tesla’s sales bucked the trend, declining by over 45% across the EU, EFTA, and the UK, and by more than 50% in the EU alone.
This follows a challenging 2024 for Tesla, where its annual sales dropped for the first time in over a decade, as demand slowed and competitors gained ground.
The primary driver of the January sales decline is likely increased competition, according to AJ Bell investment director Russ Mould.
Chinese automaker BYD has made notable gains, partly by offering features as standard that other manufacturers charge extra for.
Mould also suggested that some consumers might be taking a “principled stand” against Musk’s political activities, further impacting Tesla’s sales.
Elon Musk has stirred controversy in the U.S. with his involvement in cutting development funds and pushing to significantly reduce federal funding.
In the UK, he has expressed support for jailed far-right activist Stephen Yaxley-Lennon, also known as Tommy Robinson, while frequently criticizing Prime Minister Sir Keir Starmer.
Musk has also voiced support for Germany’s far-right AfD party, congratulating its leader following the party’s record second-place finish in recent elections.
These political stances may be negatively impacting Tesla’s outlook, according to AJ Bell investment director Russ Mould.
Tesla shares saw a significant boost after the U.S. election, driven by Musk’s perceived closeness to Donald Trump—Musk has referred to himself as “first buddy” to the former president.
Investors believed this relationship would benefit Musk’s businesses.
However, Trump has publicly opposed electric vehicles and has stated his intention to roll back initiatives aimed at increasing their adoption, which could pose challenges for Tesla moving forward.
“How anybody thought this was going to be good for Tesla, I don’t know,” Mould said.
There is also general market skittishness about the path of interest rate cuts and concerns about Trump tariff plans that could be contributing to the fall, Mould added.