Tesla’s Stock Decline: Market Challenges and Leadership Scrutiny

Tesla’s stock has seen a significant downturn in recent months, with shares falling more than 40% since January, CNN reports.

This decline has erased the post-election surge that briefly boosted the company’s value by over 90%. Elon Musk, whose wealth is largely tied to Tesla’s performance, has experienced a personal loss of $121 billion in net worth over the past three months.

Two key factors appear to be driving Tesla’s struggles: declining global sales and concerns over leadership.

1. Falling Sales Worldwide
   Tesla reported its first-ever drop in global sales last year, and forecasts for 2025 suggest continued challenges. Major Wall Street firms, including Goldman Sachs and JPMorgan, have lowered their delivery expectations for the company.

   • In China, Tesla faces intense competition from domestic automakers. In February, its shipments in the region fell 49% year-over-year. On the same day that its biggest Chinese competitor, BYD, introduced a groundbreaking fast-charging system, Tesla launched a free trial of its “Full Self-Driving” software in China—an indication of efforts to regain market share.
   • In Europe, Tesla sales have also declined. In Germany, for example, sales plummeted 76% last month, amid controversy surrounding Musk’s political affiliations.

2. Leadership and Brand Perception
   Investor confidence in Tesla has historically been tied to Musk’s leadership. However, recent polling suggests that public perception of him has shifted. A CNN poll found that 53% of Americans view Musk negatively, while 60% question his ability to handle his broader business and political endeavors.

   Additionally, used Tesla prices are dropping faster than the market average. Research from CarGurus shows that while used vehicle prices have declined by 2.7% year-over-year, used Teslas have fallen by 7.3%. Notably, used Cybertrucks are selling for 58% less than their original value.

The stock’s continued decline has raised concerns among investors. RBC recently lowered its price target for Tesla in response to growing competition, and even long-time Tesla supporters like Wedbush analyst Dan Ives have expressed concern. Ives noted that while Tesla retains an “outperform” rating, investor patience is being tested.