TSLA: What Happened?After reaching all time high of $488.50 on 18 Dec '24, Tesla has been systematically dropping making lower lows. So far it made a local low at $325.10 which is -33% from ATH.
One might intuitively assume that Tesla’s CEO, with significant administrative resources at his disposal, would drive the stock to outperform on a longer period. This narrative held true, particularly after it became evident that the Republican candidate had won the U.S. election. Traders saw Musk’s association with that political circle as a strong buy signal, believing that many others would definitely jump in as well. As a result, price broke out of the resistance driving demand and pushing the stock higher. However, this effect did not last very long as many would have expected.
WHAT HAPPENED?
Tesla was once the dominant force in the electric vehicle market, both in the United States and abroad. However, its sales are now collapsing, driven by a combination of political and technological factors — many of which are tied to Elon Musk’s increasingly unusual behavior.
The Sales Decline
Since January 2024 Tesla’s sales have plummeted, particularly in Europe. Recent figures paint a bleak picture:
Germany: 60% drop
France: 63% drop
Norway: 38% drop
Sweden: 44% drop
In the U.S., while the decline hasn’t been as drastic, Tesla’s share of the EV market is shrinking.
What’s Causing Tesla’s Troubles?
Several key factors contribute to Tesla’s struggles.
Increased Competition
Tesla’s early-mover advantage is disappearing. Established automakers like BMW, Mercedes, Hyundai and Kia, as well as newer EV startups like Rivian — now offer electric vehicles with longer range, faster charging, and more luxurious features. As a result, consumers have more choices, and Tesla is no longer the default option for EV buyers.
A Cooling EV Market
Some of the decline can be attributed to a broader slowdown in EV sales, particularly in Europe, where government subsidies have been scaled back. However, this alone does not explain Tesla’s sharp losses, especially compared to its competitors, many of whom are still seeing growth.
For what Europeans could not forgive Elon?
Musk's increasingly polarizing political stance like aligning with far-right figures or engaging with controversial accounts online — has alienated large segments of Tesla’s customer base in Europe and other liberal democracies. For a brand once associated with innovation and sustainability, Musk’s actions have tarnished Tesla’s reputation, particularly among progressive and tech-savvy buyers who once formed its core audience.
Investor Confidence is Fading
Tesla’s stock has been highly volatile, with investors growing uneasy about the company’s future. Over the past month, the stock price has declined, reflecting broader concerns about the company’s leadership and strategic direction.
The Cybertruck’s Underwhelming Launch
The Cybertruck, once hyped as a revolutionary product, has failed to live up to expectations. Instead of broad appeal, it has become a niche product, often associated with Musk’s most fervent and politically charged supporters. Rather than expanding Tesla’s customer base, the Cybertruck seems to have further divided it.
The Bigger Issue: Musk’s Brand Overshadowing Tesla
Tesla’s current crisis highlights a broader problem: when a CEO’s personal brand becomes larger than the company itself, it can have devastating consequences. Musk’s antics — once seen as part of his “genius entrepreneur” image — are now actively harming Tesla’s sales and market position.
Many people who previously invested in Tesla stock and even owned a Tesla vehicle, they've since distanced themselves, not only due to concerns over vehicle quality but also because they no longer want to be associated with Elon. And while some of Musk’s supporters claim that Tesla will be just fine, the numbers tell a different story. Sales are falling, stock prices are shaky, and confidence in the brand is slipping. The 33% drop from ATH might be just the beginning of a larger cycle of selloff.
