Tesla Shares Slide Amid Weak European Sales and Investor Concerns Over Trump’s Tariff Plans
Tesla's stock experienced a sharp decline on Wednesday, dropping nearly 6%, as European market data indicated weakening sales, and investor anxiety grew over President Donald Trump's impending tariffs on auto imports.
The European Automobile Manufacturers’ Association (ACEA) disclosed on Tuesday that Tesla witnessed a significant 40% year-over-year drop in new vehicle registrations across Europe in February, despite the broader electric vehicle market seeing a 26% increase in sales.
In a parallel development, the White House confirmed on Wednesday that President Trump is set to unveil new tariffs on auto imports. While the president had previously marked April 2 as "liberation day" and "the big one" for imposing these trade measures, he suggested earlier in the week that auto-related tariffs might be implemented ahead of schedule.
Tesla’s stock has been notably volatile throughout the year, with shares fluctuating by at least 5% on 14 different occasions. Wednesday’s decline, which coincided with a 2% drop in the Nasdaq, followed a five-day rally that had included a significant 12% surge on Monday.
The overall trajectory for Tesla’s stock this year has been downward, particularly since the beginning of President Trump’s second term in January, which also saw Tesla CEO Elon Musk taking on a role within the administration. Since Inauguration Day, Tesla shares have plummeted by 36%, with a 28% drop recorded in February—its worst monthly performance since December 2022.
Following ACEA’s report on Tuesday, analysts at RBC noted that the February decline equated to a reduction of approximately 11,000 Tesla vehicle registrations in Europe. However, they cautioned that this data "might not be indicative of true demand."
According to analysts, potential European buyers may be "holding out for the Model Y refresh" or awaiting a "new affordable model," both of which are expected to hit the market in the latter half of the year.
Tesla is preparing to scale up production of its revamped Model Y SUV next month. Earlier this year, the company carried out temporary shutdowns at select production facilities to upgrade manufacturing lines for the vehicle.
Recent political controversies have also impacted Tesla's brand perception, as some prospective electric vehicle buyers have been deterred by Musk’s increasing involvement in the Trump administration. Musk has been leading initiatives to cut federal expenditures, reduce the government workforce, and has expressed a desire to privatize certain public services, including social security.
A report from William Blair analysts on Wednesday highlighted that "pushback from Musk’s foray into politics" has resulted in "brand damage and even vandalism" at a time when Tesla’s supply chain is undergoing disruptions due to the Model Y transition and intensifying competition from Chinese automakers.
Despite these challenges, the firm retained its buy recommendation on Tesla’s stock, citing growth opportunities in the company’s energy storage sector and its ambitions in autonomous ride-hailing. Musk has vowed to launch a robotaxi service in Austin by June, although production of Tesla’s specialized autonomous vehicle, the Cybercab, has yet to commence.
Meanwhile, Alphabet’s Waymo is already operating a commercial robotaxi service in Austin and several other locations. In China, multiple automakers have begun offering an equivalent to Tesla’s Full Self-Driving Supervised—a premium semi-automated driving system—as a standard feature rather than a paid upgrade.
This week, Tesla rebranded its FSD system as “Intelligent Assisted Driving” in China, according to CNEVPost. Previously marketed as “Full Self-Driving Capability,” the system, regardless of its name, still necessitates an attentive human driver prepared to take control at any moment.
Get it on Google Play
0 Comments