Tesla Inc. (TSLA) shares suffered their steepest single-day drop in over three years on Monday, plunging more than 15% as investors grappled with a perfect storm of falling sales, growing political backlash against CEO Elon Musk, and a bleak outlook from Wall Street analysts. The electric vehicle (EV) giant’s stock hit its lowest point since before the 2020 U.S. presidential election, erasing billions in market value and leaving shareholders questioning the company’s future.
Wall Street Loses Faith in Tesla’s Growth Story
The sell-off was triggered by a wave of downgrades from analysts, who are now slashing their delivery estimates for Tesla amid weakening demand and increasing competition. UBS analyst Joseph Spak cut his first-quarter delivery projections by 16%, forecasting just 367,000 vehicles for the period. He also warned that Tesla’s sales in 2025 could decline by 5% year-over-year, a stark contrast to the company’s earlier promises of growth.
“While we do expect the Model Y refresh to help, we believe orders are somewhat muted,”
-Spak wrote in a note to clients, pointing to shorter delivery wait times in China as evidence of slowing demand.
Robert W. Baird & Co. analyst Ben Kallo echoed these concerns, lowering his delivery estimates earlier this month. The bearish sentiment has spread across Wall Street, with the average analyst forecast now predicting only a 10% increase in Tesla’s 2025 sales—far below the company’s previous growth trajectory.
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Musk’s Political Role Backfires
Elon Musk’s growing involvement in politics is also weighing heavily on Tesla’s stock. Once seen as a potential boon for the company, Musk’s high-profile role as an advisor to President Donald Trump and his vocal support for far-right parties in Europe have alienated customers and sparked protests.
In Germany, Tesla’s registrations plummeted 70% in the first two months of 2024, coinciding with Musk’s controversial comments on the country’s federal election. The backlash has been equally fierce in the U.S., where protesters have targeted Tesla dealerships and charging stations. Last week, a Tesla showroom in Oregon was shot at, and charging stations near Boston were set on fire.
“Musk’s political stance is becoming a liability for Tesla,” said Jessica Caldwell, executive director of insights at Edmunds. “Consumers are increasingly associating the brand with his polarizing views, and that’s hurting sales.”
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Sales Slump in Key Markets
Tesla’s struggles are particularly evident in Europe and China, two of the world’s largest EV markets. In Germany, Tesla’s sales dropped 76% in February, while in China, shipments from its Shanghai factory fell 49% to just 30,688 vehicles—the lowest monthly figure since July 2022.
The company is also losing ground to competitors like Volkswagen and BYD, which have been aggressively expanding their EV lineups. In January, Volkswagen outsold Tesla in electric vehicles outside of China, according to data from SNE Research.
Trade Tensions Add to Uncertainty
Tesla is somewhat insulated from the trade conflicts sparked by Trump-era tariffs, however the company faces risks from worsening U.S.-China relations. Tesla’s Shanghai factory is critical to its global operations, producing vehicles for both the Chinese market and export to Europe. Any escalation in trade tensions could disrupt supply chains and further dent sales.
See also: Trade War Erupts: Trump’s Tariffs Send Global Markets into a Tailspin
Monday’s stock plunge marks Tesla’s biggest intraday decline since January 2023. If the stock closes near its session low of $225.59, it will be the company’s worst single-day performance since September 2020.
For now, Tesla’s future hinges on its ability to navigate a challenging landscape of political backlash, slowing demand, and fierce competition. As Musk’s political role continues to overshadow his leadership at Tesla, investors are left wondering whether the company can regain its footing—or if this is the beginning of a deeper decline.
