Tesla Shares Drop Sharply Amid Investor Concerns Over Leadership and Sales

Shares of Tesla experienced a significant decline on Monday, falling by 15.4% to $222.15, marking the lowest value since late October. This downturn reflects a growing lack of confidence among investors, particularly following a surge in stock prices related to the recent election and the subsequent political climate.

The sharp drop in Tesla's stock represents its most considerable decline since September 2020, coinciding with broader market sell-offs influenced by uncertainties surrounding the trade policies of the Trump administration. Analysts have pointed to the connection between CEO Elon Musk's political affiliations and the company's recent struggles, suggesting that his support for President Donald Trump and other right-wing candidates may have alienated potential buyers.

In the lead-up to the 2024 elections, Musk invested $270 million in Trump's campaign and publicly celebrated Trump's victory over Democratic candidate Kamala Harris in November. This political engagement initially propelled Tesla's stock to a peak of $479 per share by mid-December. However, since then, the stock has lost approximately 40% of its value.

Critics argue that Musk's alignment with the Trump administration's controversial policies, particularly the proposed government downsizing initiative known as the Department of Government Efficiency (DOGE), has further exacerbated investor concerns. This department aims to implement extensive layoffs and reduce government spending, which could have ripple effects on the economy and, by extension, on businesses like Tesla.

Recent sales figures illustrate Tesla's struggles in key markets. In California, the company's largest U.S. market, sales have declined, and the automaker reported its first annual global sales drop last year. In Europe, Tesla sales fell sharply, recording a 45% decrease in January, despite an overall increase in electric vehicle sales across the continent. The most significant declines were seen in Germany and France.

In China, Tesla's sales have nearly halved compared to February of the previous year, primarily due to increased competition from local manufacturers rather than political factors. However, analysts express concern over a potential drop in Tesla deliveries in the U.S., with expectations of a 5% decline for both the first quarter and the full year compared to 2024.

UBS Global Research noted that data indicates shorter delivery times for popular models like the Model 3 and Model Y, suggesting diminished demand. The situation has been exacerbated by protests at Tesla showrooms, vandalism of vehicles, and public backlash against Musk's political stance, with some vehicles displaying messages criticizing the CEO's recent behavior.

Additionally, Musk's political endorsements have drawn ire beyond the automotive sector. His support for far-right parties and controversial remarks about Canada and British leadership have sparked further discontent among consumers, particularly those who historically support electric vehicle initiatives for environmental reasons.

Other ventures led by Musk are also facing challenges. His social media platform, X, experienced significant outages attributed to a reported cyberattack, while a recent SpaceX rocket launch ended in failure, compounding concerns over Musk's leadership across his companies.