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Tesla (NYSE: TSLA) is among the worst-performing S&P 500 stocks this year. The company is losing market share in key markets like the US, China, and Europe as multiple factors, including an aging product lineup, CEO Elon Musk’s politics, and attractive models from other car companies, have taken a toll on its sales.
According to data from Kelly Blue Book, US electric vehicle (EV) sales rose 11.4% YoY in the first quarter of 2025 while the penetration level of new EV cars rose to 7.5% compared to 7% in the corresponding quarter in 2024.
General Motors’ US EV sales more than doubled in Q1 and the Detroit giant became the second-largest EV seller in the US with a double-digit market share. On the other hand, Tesla’s sales in the US fell 9% in the quarter while its market share dipped to 44% compared to 51% in the first quarter of 2024.
Tesla Reported a Fall in Q1 Deliveries
Tesla losing market share is hardly a surprise given the sales slump. The company produced 362,000 vehicles and delivered 332,000 of these in Q1 2025. For context, the US electric vehicle (EV) giant delivered 386,810 vehicles in the corresponding quarter last year.
Tesla reported a YoY fall in its deliveries last year also which was the first time that its shipments fell on an annual basis. Incidentally, the company managed to grow its deliveries in 2020 also even as the global automotive industry was rattled by the supply chain crisis emanating out of the COVID-19 pandemic.
In its Q4 2024 shareholder deck Tesla said, “With the advancements in vehicle autonomy and the introduction of new products, we expect the vehicle business to return to growth in 2025.” Notably, last year Musk Tesla’s CEO Elon Musk said that the company’s 2025 deliveries might rise by as much as 30% as it prepares to launch new vehicles.
However, the company has had a tepid start to the year with deliveries plunging by double digits in the first quarter.
Tesla Is Losing Market Share in China
Tesla has also been losing market share in China as domestic brands especially BYD have rated ahead. While Tesla is not much impacted by the tit-for-tat tariffs by China and the US, the company has stopped taking fresh orders for its premium Model S and X in China. Tesla has its massive Gigafactory in China where it produces its Model 3 and Model Y while importing the other models from its plant in the US.
While Tesla does not provide a quarterly breakdown by geographies, data released by the China Passenger Car Association (CPCA) showed that the company’s sales fell by 11.5% YoY in March. In February, Tesla’s sales fell to a two-year low in China even as domestic Chinese companies reported stellar numbers.
In March, Tesla had a 7.5% market share in China, which while higher than in February was below the 8.8% in the corresponding month last year.
Chinese Car Companies Are Giving a Tough Fight to Tesla
There is a fierce price war in the Chinese EV market as companies have been cutting prices and offering incentives to spur sales. The Chinese auto market is among the most competitive globally, and domestic players are increasingly taking market share from foreign brands like Volkswagen and Ford.
Notably, in 2011 Tesla CEO Elon Musk laughed at the possibility of BYD becoming a competitor to Tesla. However, the Chinese company has proven critics wrong and offers EV models at quite competitive prices.
BYD’s annual revenues rose 29% YoY to $107 billion last year while Tesla’s revenues were around $97.7 billion. The steep rise in BYD’s sales was led by a record 4.27 million deliveries which was well ahead of Tesla which reported a YoY fall in its 2024 deliveries – the first in the company’s history.
BYD has already beaten Tesla in terms of total deliveries and its Q1 battery electric vehicle shipments were also ahead of Tesla.
TSLA’s Sales Plunge in Europe
Europe has been another challenging market for Tesla. The company’s market share in France fell to 1.63% in the first quarter of 2025 as compared to 2.55% in the corresponding quarter last year. While Tesla’s sales in the UK rose slightly in Q1, the company registered over 50% declines in Germany, Sweden, and Denmark.
“Tesla’s weak numbers in Europe are the result of a combination of factors,” said Ben Nelmes, chief executive of research group New AutoMotive.
Nelmes added, “The company has failed to develop models that can compete on price. On top of this, the CEO’s involvement in U.S. politics is alienating many consumers.”
While the EU has slapped tariffs on EV imports from China, Chinese car makers continue to gain market share, in part due to hybrid cars that don’t attract the punitive tariffs.
Musk’s Politics is Hurting Tesla
Musk’s association with the Trump administration and his time commitments towards DOGE (Department of Government Efficiency) which he heads, has been making a section of the market apprehensive about the billionaire’s ability to devote adequate time at Tesla. Such concerns have been around for quite some time as apart from Tesla Musk also heads several other companies like SpaceX and Neuralink. Of late, he has added X and his artificial intelligence (AI) startup xAI to the ever-growing list of companies that he owns.
Even Musk has admitted that his stint with the Trump administration is hurting Tesla and at a town hall in Green Bay late last month he said, “This is a very expensive job, is what I’m saying.”
According to Musk, “What [the protesters are] trying to do is put massive pressure on me, and Tesla I guess, to you know, I don’t know, stop doing this.” He added, “My Tesla stock and the stock of everyone who holds Tesla has gone, went roughly in half. I mean it’s a big deal.”
Analysts Turn Bearish on TSLA Stock
Multiple analysts have lowered Tesla’s target price over the last month. Dan Ives of Wedbush Securities who had a Street-high target of $550 on Tesla lowered its price forecast to $315 saying, “The economic tariff Armageddon unleashed by the Trump Administration is a double whammy for Tesla in our view.”
According to Ives, “Tesla has essentially become a political symbol globally … and that is a very bad thing for the future of this disruptive tech stalwart and the brand crisis tornado that has now turned into an F5 tornado.”
He added, “We now estimate Tesla has lost/destroyed at least 10% of its future customer base globally based on self-created brand issues and this could be a conservative estimate.”
Ives warned, “Our long-standing bull view of Tesla remains, but there is no denying this is a pivotal moment of truth for Musk to turn things around … or darker days are ahead.”
Earlier this week, Goldman Sachs, UBS, and Mizuho also lowered Tesla’s target price. “While lower estimates for 2025 are now more broadly expected, we believe the whole trajectory of earnings for TSLA remains too high and could face negative revisions post 1Q25 results,” said UBS analyst Joseph Spak in his note.
