TLDR
- Tesla stock has fallen 45% from its December high after surging following Trump’s election
- Insiders including CFO and directors have been selling shares amid the downturn
- European sales dropped 49% in early 2025 despite growth in the broader EV market
- CEO Elon Musk’s political involvement may be damaging the Tesla brand
- The company plans to launch a robotaxi service in Austin this June to compete with Alphabet’s Waymo
History Shows Recovery Pattern
Tesla’s stock has dropped dramatically, falling 45% from its December 2024 high of $480 per share. This decline represents the fourth time in Tesla’s history that shares have tumbled more than 50% from a record high.
The stock initially surged after Donald Trump’s presidential election. Investors anticipated benefits from the relationship between CEO Elon Musk and President Trump.
However, those expected benefits have not materialized. Instead, Tesla faces multiple challenges that have driven the stock downward.
Looking at Tesla’s past downturns provides insight into potential recovery patterns. Tesla experienced similar major stock declines in 2017-2019, 2020, and 2021-2022.
Each time, the stock eventually rebounded and reached new highs. Following these previous downturns, Tesla shares returned an average of 446% during the 12 months after hitting bottom.
Market Share Challenges
Tesla is currently battling weakening demand across its main markets. The company has lost market share in all three of its major regions in 2024.
These losses have accelerated in 2025. January data shows Tesla’s market share fell by nearly 7 percentage points in the U.S.
In Europe, the decline was 8 percentage points. China saw a drop of 2 percentage points.
One factor driving this weakness is increased competition from other automakers. Tesla’s aging lineup of electric cars has struggled against newer models from competitors.
The situation in Europe is particularly concerning. Tesla sales declined 49% during the first two months of 2025.
This sharp decline occurred despite strong growth in the broader European electric car market. This suggests factors beyond competition may be affecting Tesla’s performance.
Leadership Concerns
Elon Musk’s increased political involvement appears to be affecting Tesla’s brand image. His work with the Trump administration on the Department of Government Efficiency (DOGE) has created controversy.
Some Tesla dealerships and charging stations have reportedly experienced vandalism. This suggests Musk may be alienating potential buyers with his political activities.
Musk recently held an all-hands meeting to reassure employees. He encouraged them not to sell their shares.
He highlighted the company’s innovations in artificial intelligence, autonomous vehicles, and robotics. However, his message comes as several Tesla insiders have been selling their stock.
CFO Vaibhav Taneja sold 2,672 shares on March 6. Director James Murdoch sold 54,776 shares worth $13.2 million.
Even Kimbal Musk, Elon’s brother and a Tesla director, sold 75,000 shares on February 6 for $27.6 million. While insider sales can happen for various reasons, the timing raises questions.
Future Growth Initiatives
Tesla plans to introduce a more affordable vehicle this year. This model, reportedly called the Model Q, may help address some demand concerns.
A more critical initiative is Tesla’s planned launch of an autonomous ride-sharing service. The robotaxi service is scheduled to debut in Austin, Texas, this June.
This puts Tesla in direct competition with Alphabet’s Waymo. Waymo has been providing autonomous rides in several cities for years.
Tesla’s approach to autonomous driving differs from Waymo’s. Tesla relies entirely on computer vision through cameras.
Waymo uses a combination of lidar, radar, and cameras. This requires expensive high-definition mapping of streets before launching in new cities.
Tesla’s camera-only approach could theoretically allow faster scaling to new cities. However, Waymo’s multi-sensor approach may offer safety advantages.
Analysts will be closely watching Tesla’s first-quarter delivery report on April 2. They have reduced estimates to 355,000 deliveries.
This would represent a 15% drop from the previous year. Such a decline would fall well below Musk’s goal of 20-30% annual growth in vehicle sales.
A double-digit decline in deliveries would further confirm the challenges facing Tesla. The first-quarter report will provide clearer evidence of how much Musk’s political involvement is impacting the business.
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