Shares of the electric car producer fell more than 8% on Tuesday, bringing the company’s market capitalization below $1 trillion and to its lowest level since November 7, two days after President Donald Trump’s election triumph.
The stock is down 25% this year, while the Nasdaq is down only 1.5%, and it has fallen more than 35% from its record close on December 16. CEO Elon Musk has lost more than $100 billion in net worth over that time, yet he remains the world’s richest person, with a fortune of around $380 billion. The latest decline came after Reuters reported on Monday that Tesla’s much-anticipated improvement to its semi autonomous driving systems had disappointed owners. Many customers informed the outlet that Tesla’s “navigate on city streets” capability in China fell short of Musk’s claims about self-driving technology.
Other EV manufacturers in China, notably BYD, provide partially autonomous driving systems for free or at a significantly reduced cost. Xiaomi’s popular SU7 model incorporates the company’s similar technology as a basic feature for free. The report from China heightened Tesla shareholders’ concerns. Some of the anxiety is about the company’s performance, while others are about Musk, who spends a lot of time in Washington, D.C., running President Trump’s so-called Department of Government Efficiency, or DOGE. Musk and his crew in Washington have gotten unprecedented access to federal computer systems and taxpayer data, and the president has allowed the billionaire to coordinate mass firings of employees in agencies entrusted with overseeing his firms, including Tesla.
Musk’s radical political speech and action have prompted opponents in many areas to organize protests, including against Tesla stores and service facilities. Tesla’s shares fell earlier this month when Trump revealed intentions to impose substantial tariffs on imports from Canada, Mexico, and China, which coincided with a dip in Tesla vehicle registrations throughout Europe in January and February. Tesla’s fourth-quarter earnings and sales fell short of analysts’ expectations, with automotive revenue down 8% year on year and operating income sliding 23%. In its late January report, the firm highlighted lower average selling prices across its aging portfolio of Model 3, Model Y, Model S, and Model X vehicles as a primary cause of the reduction.
According to the California New Car Dealers Association, Tesla sales fell 11.6% in the fourth quarter of 2024 in the state, which was formerly Tesla’s largest domestic market. Tesla shares are trading around 20% higher than before Trump’s election. The stock’s 15% increase the day following the election accounts for most of the rally’s remaining strength. Musk was a prominent supporter of Trump’s presidential campaign, donating $290 million to Republican politicians and charities in 2024, with the majority of that going toward restoring Trump to the White House.
