It has been a rough year for Tesla shareholders.
Since reaching an all-time high in December on the back of the euphoria felt when President Donald Trump won the 2024 election and named Tesla CEO Elon Musk head of the Department of Government Efficiency, which is tasked with rooting out waste, fraud, and abuse from the government, Tesla (TSLA) shares have plummeted.
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The stock is down 42% from its five-month high, and much of that decline can be attributed to the political backlash from Musk’s trip to Washington.
Tesla’s foothold in Europe was the first domino to fall. Sales in the region dropped 49% during the first two months of the year as Musk flirted with far right-wing politics in a region that mostly (but not uniformly) leans to the left.
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Despite selling more vehicles, the company’s market share in the region shrunk to 1.1%.
However, European sales are a relatively small drop in the bucket for Tesla. The real concerning news of the quarter came when the company announced that overall first-quarter sales dropped 13% year over year, representing the largest decline in company history.
But it’s not just Musk working against Tesla. The competition in the EV space has undoubtedly become more intense, and while Tesla is by far the market leader in the U.S., with over 48% (as of Q3 2024), that number was 80% in 2019.
Tesla faces another crisis abroad
Tesla has a much stronger foothold in China than it does in Europe.
The company has an 11.47% market share in battery electric vehicles and accounts for 7.48% of China’s new energy vehicle market.
It’s about as strong a foothold as an American car company can have in China.
Sales in 2024 jumped 8.8% in China to a record of 657,000 vehicles delivered. But even here the company saw some slippage as its market share for battery-only EVs fell to 10.4% from 11.7%.
This is thanks to the dominance of domestic stalwart BYD, which has a 32% new energy vehicle market share in the country.
Now, it’s becoming harder for Tesla to maintain its shrinking footprint.
Tesla has suspended taking new orders for Model S and Model X vehicles in China, Reuters reported Friday after checking the company’s website.
Both models are made in the U.S. and imported to China despite the country’s large Gigafactory.
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The move comes amid an escalating trade war between the U.S. and China, further complicating Musk’s relationship with the country. As an unofficial member of the Trump Administration’s cabinet, Musk is also a key player in this conflict.
Tariff war wreaks havoc on Tesla
This week, Trump took the unprecedented measure of placing a 125% tariff on all Chinese imports, a figure he increased to 145% after saying that China was wrong for retaliating against his threats.
The Gigafactory in Shanghai makes Model 3 and Model Y vehicles for China and also Europe.
More Automotive news:
- General Motors delivers surprising business update
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- Apple creates clever way to stop car thieves
China imported 1,553 Model X and 311 Model S vehicles in 2024, Reuters reported, so the volume affected by this news is small. However, it is yet another sign that Musk’s political ambitions come with some risks that can and will be felt by Tesla investors.
Tesla shares were down 2.77% in early market trading Friday.
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