WASHINGTON, Feb 26 — Tesla’s stock tumbled on Tuesday, dragging its market valuation below the $1 trillion mark as the company faced a sharp decline in European sales and mounting concerns over CEO Elon Musk’s political involvement.
The electric vehicle giant recorded sales of fewer than 10,000 units in Europe last month, marking a staggering 45% drop compared to the previous year. In response, Tesla’s stock closed down 8.4% at $302.80, wiping out approximately $89 billion from its market value in a single trading session.
Adding to investor anxiety, Musk’s growing political entanglements have stirred controversy. He has taken on an advisory role in former U.S. President Donald Trump’s administration, focused on government spending cuts, while also expressing strong support for far-right European leaders, including those in Germany’s recent elections. His political stance has drawn backlash from European policymakers, potentially exacerbating Tesla’s challenges in the region.
“Tesla is clearly struggling in Europe, and Musk’s brand image is becoming a headwind,” said Dan Ives, an analyst at Wedbush Securities. He estimated that 10% to 15% of the pressure on Tesla’s stock stemmed from negative sentiment surrounding Musk himself.
Tesla shares had surged following the 2024 U.S. presidential election, with investors betting that Musk’s close ties to Trump could benefit his businesses. However, the latest European sales figures have cast doubt on that optimism, raising concerns that Musk’s political positioning—while potentially advantageous in the U.S.—may be damaging Tesla’s prospects internationally.
“Musk’s political stance in Europe, particularly in Germany, is not exactly a selling point for Tesla,” Ives noted, adding, “It’s like putting mustard on a slice of pizza.”
Beyond its European setbacks, Tesla is also facing intense competition in China, a critical EV market. Rival automaker BYD has been expanding aggressively, recently announcing plans to introduce self-driving technology across nearly all its vehicles. In response, Tesla has revealed its own plans to roll out advanced self-driving features for its cars in China.
As Tesla navigates these headwinds, investors will be closely watching whether the company can regain its momentum or if political and market challenges will continue to weigh on its stock. — AFP
