Tesla Stock Plummets as Elon Musk Faces Mounting Challenges

Tesla's stock has suffered a 40% decline since January, wiping out the gains it experienced after Election Day. The drop has significantly impacted Elon Musk's net worth, slashing it by $121 billion in just three months. Investors who once saw Musk as a visionary leader are now questioning his focus as Tesla faces global sales declines and increasing market competition.

Tesla has reported its first-ever drop in global sales, with analysts from major financial institutions like RBC, UBS, Goldman Sachs, Mizuho, and JPMorgan lowering their delivery forecasts for 2025. In China, Tesla has struggled to keep up with local carmakers, with shipments dropping by 49% year-over-year. The situation in Germany is even worse, as Tesla’s sales fell 76% last month amid consumer backlash over Musk’s political affiliations.

Adding to Tesla’s troubles, its top Chinese rival, BYD, recently introduced a new charging system that allows cars to gain 250 miles of range in just five minutes, which is twice as fast as Tesla’s charging capabilities. In response, Tesla launched a monthlong free trial of its Full Self-Driving (FSD) software in China in a desperate bid to regain market share. The move, however, did little to restore investor confidence, as Tesla's stock fell 5% on Monday and another 5% on Tuesday after RBC slashed its price target due to growing competition.

While Tesla struggles, Musk remains focused on his political agenda, diverting attention away from the company’s challenges. His controversial public image has fuelled further backlash, with a CNN poll revealing that 53% of Americans now hold a negative view of him. Investor patience is running thin, and Tesla’s brand perception appears to be in decline.

JPMorgan analysts described the situation as unprecedented, writing, "We struggle to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly." Meanwhile, a growing #TeslaTakedown movement has emerged, urging consumers to sell their Teslas, boycott the stock, and protest at showrooms.

Even Dan Ives, a longtime Tesla supporter and analyst at Wedbush, appears to be losing faith. While still maintaining an "outperform" rating, Ives warned last week that investors' patience is "wearing very thin."

Tesla's past success was built on cutting-edge technology and high demand for its vehicles. Investors were willing to tolerate Musk’s eccentric behaviour as long as the company remained dominant in the electric vehicle market. Now, however, with declining sales, intensifying competition, and growing consumer backlash, Tesla’s future appears increasingly uncertain.

Musk has long been the face of Tesla—a connection that helped him become the world’s richest person when the company was thriving. But now, as Tesla struggles and Musk’s public persona becomes more polarising, that same connection could prove disastrous for both.
Source: CNN