Tesla’s Stock Decline Sparks Investor Concerns Over EV Future

By Evans Momodu
Published 15:40 UK GMT


Market Challenges for Tesla and Elon Musk’s EV Vision

Tesla’s stock has plunged nearly 50% in three months, leading investors to question whether Elon Musk’s electric vehicle (EV) era is losing momentum.

The company’s market capitalisation, once at a record $1.5 trillion on December 17, 2024, has dropped 45%, erasing gains made after Musk financially backed Donald Trump’s election victory.

Despite this decline, Tesla (TSLA.O) remains highly valued compared to traditional automakers and tech giants. Investors have historically seen Tesla as more than an EV company, believing in its robotaxi and artificial intelligence (AI) advancements.

However, most of these futuristic projects remain unfulfilled, and Musk has annually promised self-driving Teslas since 2016—a goal that remains unmet.

Tesla’s EV business generates most of its revenue but contributes to less than 25% of its stock value, according to financial analyses.

The company’s valuation primarily depends on the future of autonomous vehicles and humanoid robots, neither of which are currently operational.

Factors Driving Tesla’s Stock Decline

• Falling vehicle sales and declining profits
• Backlash over Musk’s political involvement, including his mass firings of government employees as a Trump advisor
• Concerns that Musk’s political engagement distracts him from Tesla’s core business
• Increased competition in the EV market, particularly from China’s BYD
• Regulatory uncertainty regarding Tesla’s robotaxi ambitions

Despite these setbacks, Tesla’s market capitalisation still sits at $845 billion, which remains higher than the combined value of the next nine largest global automakers, despite Tesla selling just 1.8 million vehicles in 2024, compared to their 44 million total sales.
Source: Reuters