Shares of Tesla (TSLA) tumbled more than 9%, bringing the company’s valuation below $1 trillion for the first time since November 2024. The drop follows a significant decline in Tesla’s EU and UK sales, which fell by almost 50% in January.

Tesla Faces Intense Competition in Europe

Despite the European electric vehicle (EV) market growing by over 33% in January, Tesla sales in the EU, EFTA, and UK slumped by more than 45%—and over 50% in the EU alone, according to trade body Acea.

Investment experts attribute Tesla’s sales decline to increasing competition from Chinese automakers, particularly BYD, which offers advanced features as standard—features that Tesla charges extra for.

Is Elon Musk’s Controversial Image Hurting Tesla?

Industry analysts also suggest that Elon Musk’s polarizing political actions could be impacting consumer sentiment. Musk has been vocal in US politics, supporting drastic federal funding cuts. In the UK, he has backed jailed far-right activist Stephen Yaxley-Lennon (Tommy Robinson) and criticized Prime Minister Sir Keir Starmer.

In Germany, Musk has expressed support for the far-right AfD party, congratulating its leader after recent election gains. Some potential Tesla buyers may be taking a “principled stand” against Musk’s political stance, according to AJ Bell investment director Russ Mould.

Tesla Stock at Risk Amid Market Uncertainty

Tesla’s stock had previously surged after the US election, as Musk’s close ties with Donald Trump fueled investor optimism. However, Trump has publicly opposed EV incentives and has vowed to roll back support for electric cars, creating further uncertainty for Tesla’s future.

Along with political concerns, interest rate fears and potential trade tariffs under a Trump administration have added to investor skittishness, contributing to Tesla’s latest stock decline.

As Tesla battles fierce competition, political backlash, and economic uncertainty, the company faces a challenging road ahead.