Tesla (NASDAQ: TSLA) is facing a rough start to 2025, struggling to sustain the momentum that fueled its late 2024 rally. On February 25, Tesla’s stock plunged over 8%, closing at $302.80 and dragging its market capitalization below $1 trillion for the first time in months.
So far this year, Tesla has shed 25% of its value, wiping out over $500 billion in market capitalization and significantly underperforming the Nasdaq, which is down just 1.3% in the same period.
The decline has been fueled by disappointing Q4 earnings, weaker-than-expected vehicle deliveries, and mounting competition from both legacy automakers and rising EV startups.
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Adding to investor concerns, fresh data from the European Automobile Manufacturers Association (ACEA) revealed a sharp decline in Tesla’s European sales, raising doubts about its ability to maintain dominance in key markets.
Tesla’s European sales slump
One of the biggest factors contributing to the recent drop is Tesla’s shrinking foothold in Europe, where competition is heating up. According to ACEA, Tesla’s European sales plummeted 45% in January, a stark contrast to the broader European EV market, which surged 34 % in the same period.
For instance, the EV giant registered only 9,945 vehicle sales in January, down from 18,161 a year earlier, as reported by Bloomberg. Meanwhile, SAIC Motor, a Chinese automaker, saw a 36.8% surge in car registrations, further tightening the competitive landscape.
The growing competition and shifting public perception of Elon Musk’s political ties also appear to be weighing on Tesla’s European sales. In Germany, protests over Musk’s alleged association with far-right groups have fueled concerns about Tesla’s reputation, potentially affecting consumer sentiment.
China sales decline adds to Tesla’s troubles
Tesla’s struggles extend beyond Europe, with sales in China also taking a hit. In January, China-made Tesla EV sales dropped 11.5% year-over-year, falling to 63,238 units from 71,447 in the same month last year.
The decline highlights intensifying competition from Chinese EV makers, who are aggressively expanding their market share with more affordable and feature-rich models.
On top of this, Tesla’s new Autopilot update in China has sparked disappointment among customers, failing to meet expectations and further denting the company’s reputation. Reports of the underwhelming software update have added to investor anxiety, compounding the stock’s recent struggles.
Featured image via Shutterstock
