Tesla’s Stock Crashes 44%—Here’s Why Experts Are Sounding the Alarm
Tesla’s stock has been on a steep decline in 2025, shedding around 44% of its value so far. This dramatic drop has raised alarms among investors, with many questioning the reasons behind the sudden downturn. To help understand the situation, renowned valuation expert Aswath Damodaran, a professor at NYU’s Stern School of Business, has weighed in on the stock’s struggles.
What’s Driving the Tesla Sell-Off?
Damodaran, widely known for his expertise in valuation, points to three main factors contributing to Tesla’s rough year:
-
Slower EV Demand
One of the key reasons behind Tesla’s stock drop is the softening demand for electric vehicles. While the EV market is still growing, it’s no longer growing as fast as before, which is starting to affect Tesla’s sales. -
Rising Competition from BYD
Tesla has faced increased competition, especially from Chinese automaker BYD. While Tesla has traditionally dominated the premium EV market, BYD is now targeting the mass market with more affordable vehicles, putting pressure on Tesla’s market share. -
Elon Musk’s Political Involvement
Another major factor, according to Damodaran, is CEO Elon Musk’s growing political presence. Musk’s leadership of the Department of Government Efficiency (DOGE) and his involvement in various political activities have raised concerns that his focus may be shifting away from Tesla, affecting the company’s strategic direction.
Damodaran’s Price Prediction for Tesla
Given these challenges, Damodaran has lowered his valuation for Tesla, predicting that its stock could drop further to around $148 per share. This would represent a 38% drop from its current value, highlighting the depth of the company’s struggles in 2025.
Additional Concerns About Tesla’s Future
Beyond Damodaran’s analysis, other experts have raised additional concerns about Tesla’s future. Sales in key markets, particularly Europe, have been underperforming. Tesla’s European sales were down by 45% in January 2025 compared to the same period last year, further stressing the company’s weakening position.
Moreover, Tesla’s brand is facing challenges linked to Musk’s political affiliations. In some regions, consumer protests and boycotts have led to concerns about Tesla’s reputation, which could affect sales moving forward.
What’s Next for Tesla?
With the stock in freefall and demand for EVs showing signs of slowing, Tesla is in a tough spot. The company has plans to launch a more affordable vehicle later in 2025, hoping to reclaim some market share from its competitors. However, as competition intensifies and Musk’s political entanglements continue to stir controversy, Tesla’s ability to regain its former glory remains uncertain.
Conclusion
Tesla’s 44% plunge in stock value is a result of a complex mix of factors: slowing demand, rising competition, and concerns over Musk’s political influence. While the company remains a leader in the EV market, its future growth and stock performance will depend on how it navigates these significant challenges.
