TLDR
- Tesla shares fell 8.4% on Tuesday to $302.80
- European Tesla registrations dropped 45% in January to 9,945 vehicles
- Tesla stock is now down 25% year-to-date and 38% from its December peak
- Market cap has fallen from $1.54 trillion to $974 billion since mid-December
- Overall European EV market grew 37% in January while Tesla declined
Tesla (TSLA) shares plunged 8.4% on Tuesday to $302.80 following reports of a dramatic 45% decline in European vehicle registrations in January. This drop comes amid growing concerns about CEO Elon Musk’s political activities and their potential impact on the company’s brand image.
Tesla’s stock price has experienced significant volatility in recent months, dropping 25% since the beginning of the year and 38% from its 52-week high of $488.54 reached on December 18, 2024. The company’s market capitalization has shrunk from $1.54 trillion in mid-December to $974 billion.
The latest drop comes as the electric vehicle maker reported just 9,945 vehicle registrations in Europe for January, a 45% decrease from the same period last year. This decline is particularly concerning as it contrasts sharply with the broader European electric vehicle market, which saw a 37% increase during the same timeframe.
Industry analysts point to several factors contributing to Tesla’s European sales slump. The company’s popular Model Y midsize SUV is currently undergoing a refresh, which may be causing potential buyers to delay their purchases until the new model becomes available. Additionally, Tesla faces increased competition from established European manufacturers like Volkswagen and Renault, as well as from Chinese companies like SAC Motor.
Elon Musk’s growing political profile appears to be affecting Tesla’s brand perception as well. As the head of President Trump’s Department of Governmental Efficiency (DOGE), Musk has been tasked with reducing federal spending, a role that has made him increasingly controversial. His recent appearance at a conservative meeting where he waved a chainsaw drew both praise and criticism.
Musk’s European controversies have been particularly noteworthy. He has publicly supported Germany’s far-right Alternative for Germany Party, made a hand gesture at a U.S. rally that some interpreted as a Nazi salute (which Musk has denied), and called for the jailing of British Prime Minister Keir Starmer. These actions have potentially alienated some European consumers who might otherwise consider purchasing Tesla vehicles.
Beyond political concerns, some investors worry that Musk is spread too thin across his various business ventures, which include SpaceX, X (formerly Twitter), Neuralink, and The Boring Company, in addition to his new governmental role. Despite these concerns, Musk has consistently rejected suggestions that he should scale back his responsibilities.
Looking ahead to Tesla’s first-quarter results, the Kalshi prediction market projects deliveries of approximately 359,000 vehicles, which would represent the company’s worst quarterly performance since the third quarter of 2022. Official global sales data is not expected until April.
Stock breaks below ascending trendline
From a technical analysis perspective, Tesla’s stock has broken below its previous upward trend channel. The $330 level now represents a significant resistance point, and if the key $300 psychological support level fails to hold, analysts suggest the price could decline further toward $270.
Despite these challenges, many analysts maintain a cautiously optimistic outlook on Tesla’s future. According to TipRanks, out of 35 analysts surveyed, 13 still recommend buying Tesla shares. The average 12-month price target stands at $357, suggesting potential upside from current levels.
Some market observers believe that Musk’s relationship with President Trump could potentially accelerate the regulatory approval process for Tesla’s robotaxi service. Additionally, Tesla’s possible entry into the Indian market represents another potential growth catalyst.
The stock’s recent performance highlights the complex interplay between Tesla’s business operations, Musk’s political activities, and broader market factors that continue to influence investor sentiment toward the electric vehicle pioneer.
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