Tesla Inc. (NASDAQ: TSLA) shares extended their sharp decline in Monday trading, shedding billions in market value as political controversies and slumping global demand weigh on the electric vehicle (EV) giant. The stock, now trading below its Election Day close, faces mounting pressure from European sales crashes, a dramatic decline in China deliveries, and Wall Street’s latest downgrade.
Tesla Faces Sales Crisis in Europe and China
Tesla’s market presence in Europe is deteriorating rapidly, with February registrations plummeting across key markets:
- Germany: Down 76%
- Italy: Down 55%
- Sweden: Down 50%
Industry analysts cite CEO Elon Musk’s political affiliations as a growing risk to Tesla’s brand appeal, particularly in Europe, where consumers are increasingly turning to competitors.
The challenges are even more pronounced in China, where Tesla’s sales fell 49% in February, marking a stark contrast to domestic EV rivals who posted gains. This alarming slump drew rare commentary from China Passenger Car Association Secretary General Cui Dongshu, who warned of the “unavoidable risk” stemming from Musk’s controversial public persona.
UBS Slashes Tesla Price Target as Demand Weakens
UBS analyst Joseph Spak delivered another blow to Tesla, cutting his firm’s price target by $34 to $225 amid concerns over delivery shortfalls and margin pressure. Spak forecasts Tesla’s Q1 2025 deliveries to fall 26% from Q4 2024 and 5% from the prior-year quarter.
“Our UBS Evidence Lab data shows low delivery times for the Model 3 and Model Y (generally within two weeks) in key markets, which we believe is indicative of softer demand,” Spak wrote in his report.
Tesla’s declining sales trajectory is expected to pressure profit margins, with Spak predicting a gross margin decline to 10.3%, a full 6 percentage points lower than a year ago. Additionally, he slashed Tesla’s 2025 delivery forecast to 1.7 million units, about 14% below Wall Street’s consensus.
Activists Target Tesla Showrooms Amid Political Fallout
Tesla’s woes are not just financial—political activism is further eroding consumer sentiment. Protests erupted across major U.S. cities over the weekend, with activists targeting Tesla showrooms in New York and Chicago. The demonstrations, dubbed “Tesla Takedown”, are linked to Musk’s involvement in federal cost-cutting measures that resulted in widespread government layoffs.
While Musk has frequently touted his stance as a “free speech absolutist,” his dealings in China and association with U.S. political figures have created a backlash that is proving costly for Tesla’s global image.
Low-Cost EV Strategy Could Squeeze Tesla’s Margins Further
Tesla is banking on its upcoming lower-cost vehicles to revive demand, but analysts warn this move may cannibalize sales of the Model 3 and Model Y, leading to thinner profit margins. Spak notes that the new vehicles, expected to be priced $5,000 to $7,000 below existing models, will struggle to maintain Tesla’s profitability unless manufacturing costs are drastically reduced.
Tesla Stock Hits Five-Month Low
Tesla shares sank 8% in early Monday trading, reaching $241.92, their lowest level since October. With multiple headwinds—from weakening demand to political controversies and shrinking profit margins—Tesla faces mounting challenges in maintaining its dominance in the EV market.
Stay tuned for more updates on Tesla stock, global EV trends, and expert market analysis.
