Tesla's shares tumbled more than 9% after the electric vehicle (EV) giant reported a sharp decline in sales across the European Union and the UK in January.

The slump pushed Tesla’s market valuation below the $1 trillion mark for the first time since November 2024.

According to industry data, while overall EV sales in Europe grew by more than a third in January, Tesla’s performance contrasted sharply. Sales across the EU, the European Free Trade Association (EFTA), and the UK plunged over 45%, with a steeper decline of more than 50% in the EU alone.

Analysts attribute the decline primarily to intensifying competition, particularly from Chinese automakers such as BYD. Russ Mould, investment director at AJ Bell, noted that BYD’s strategy of offering premium features as standard has given it a competitive edge over Tesla, where such features often come at an additional cost.

Political factors may also be influencing consumer sentiment, Mould suggested. Tesla CEO Elon Musk’s controversial political stance has sparked backlash on both sides of the Atlantic. In the US, he has been linked to funding cuts for development programs and advocating reductions in federal spending. In the UK, he has voiced support for jailed far-right activist Stephen Yaxley-Lennon, also known as Tommy Robinson, and has been openly critical of Prime Minister Sir Keir Starmer. Meanwhile, in Germany, Musk has endorsed the far-right Alternative for Germany (AfD) party.

Despite receiving an initial boost from his ties with US President Donald Trump, Musk’s alignment with Trump may pose long-term challenges. Trump, a vocal critic of electric vehicles, has vowed to roll back policies supporting EV adoption, which could negatively impact Tesla’s future.

Additional market uncertainties, including concerns over interest rate adjustments and potential trade tariffs under Trump’s leadership, are further weighing on Tesla’s stock performance, Mould added.

Source: BBC

BDST: 0852 HRS, FEB 26, 2025
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