Tesla's shares dropped over 15% due to declining sales in China and Europe, Musk's controversial politics, and broader market uncertainties. Investor confidence wanes amidst production challenges and potential tariff changes, with analysts divided...
By ET Bureau |
AP
The drop in share prices for the seventh straight week—the longest losing streak since the company debuted on NASDAQ in 2010—has already wiped out $800 billion in market cap
Elon Musk’s Tesla Inc saw its worst day on Wall Street in half a decade, with share prices plunging over 15% on Monday. This was the American EV manufacturer’s largest single-day percentage decline since September 2020. The drop in share prices for the seventh straight week—the longest losing streak since the company debuted on NASDAQ in 2010—has already wiped out $800 billion in market cap
WHAT CAUSED THE CRASH Tesla’s sales are declining in key markets in China and Europe, amid heightened competition from rival BYD and delays in the introduction of the Model Y update. Sales of Tesla’s China-made vehicle for the country and exports dropped 49.2% to 30,688 units in February over the same month last year — the lowest since August 2022.
MUSK’S POLITICS HITS BRAND As head of the US Department of Government Efficiency, Musk’s policies of cutting down federal spending led to job cuts and program eliminations, causing widespread protests. There have been a series of attacks on Tesla showrooms, charging stations and vehicles across the US. Potential Tesla customers who prefer brands that stay politically neutral may be reconsidering purchases, say industry watchers.
BROADER MARKET’S BEHAVIOUR Tesla’s share prices are dropping amid a broader decline in the market and macro-economic uncertainties. Investors are wary of Trump’s tariff policies, prompting many to seek safer investment options.
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ANALYSTS ON TESLA’S FUTURE Morgan Stanley continues to maintain a positive outlook, pointing out its strong capabilities in AI and robotics as a longterm advantage. Others, however, hold that the automaker’s declining sales, production challenges and Musk’s political involvement could damage the brand. UBS lowering Tesla’s Q1 delivery estimates has added to market anxiety.
ROAD AHEAD TO STABILISE SHARE PRICES Tesla needs to resolve production challenges and stabilise sales in crucial international markets. It needs to effectively navigate economic uncertainties, including potential tariff changes indicated by Trump. Additionally, it needs to rebuild investor confidence by addressing concerns regarding Musk’s leadership
