You can’t give Tesla NASDAQ:TSLA vehicles away in Europe right now.
On 7 March we outlined the factors behind our own decision to go short on Tesla stock. At the time Tesla stock was priced at $270.
At the time of writing Tesla shares were trading at $231. It is considered to be one of the most shorted stocks on Wall Street right now.
Tesla: what’s behind the 2025 sell-off in the stock?
Tesla has experienced a drop of more than 40% in its stock in 2025, driven by a combination of negative factors. The decline in sales expectations and the increasing politicization of its brand have pushed away investors and consumers, severely affecting the company’s stability.
Elon Musk’s relationship with President Donald Trump has sparked controversy, causing a significant portion of Tesla’s customer base to seek alternatives in the electric vehicle market. Morgan Stanley has estimated that some 70% of Tesla’s customer base in the US were Democrats, who were far more likely to get behind Musk’s vision before he teamed up with the Republicans. That honeymoon seems to be over.
Musk still does not seem to be outwardly concerned about how his political activities are affecting Tesla. But short of convincing Trump to dial back on his tariffs project, we’re not sure what he can to improve its fortunes in the medium term.
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Vehicle deliveries in the first quarter of 2025 are expected to be at their lowest level in three years. The loss of customers has been a significant blow, but competition from Chinese manufacturers has also impacted Tesla. Companies like BYD have gained ground with more affordable and technologically advanced models, reducing Tesla’s market share in China and other key regions.
Tesla is worried about Trump’s tariffs too
On the other hand, the company has expressed concern over trade policies that Trump may implement. Tesla has sent a letter to the Office of the US Trade Representative warning about the effects of possible trade retaliation. The company argues that US exporters, like itself, could be disproportionately affected by increased tariffs on foreign products and components.
The uncertainty generated by these factors has led several top executives and board members of Tesla to sell large amounts of stock.
Since February, executive stock sales have exceeded $100 million, suggesting a lack of internal confidence in the company’s future. James Murdoch, a board member, sold $13 million worth of shares on March 10, the same day Tesla suffered its most significant single-day drop in five years.
Kimbal Musk, Elon Musk’s brother and board member, sold 75,000 shares valued at $27 million. Meanwhile, Robyn Denholm, the board chair, made two recent sales totalling over $75 million.
Analysts have interpreted these transactions as warning signs about the company’s future performance, as Tesla’s market value has fallen nearly 50% from its peak in December 2024.
“As Tesla faces these challenges, investors are cautiously watching the company’s performance in the coming months,” said Antonio Di Giacomo, an analyst with the brokerage XS. “Tesla’s future appears increasingly uncertain with rising competition, brand politicization, and economic uncertainty. Unless the company can reverse the trend with practical strategies, 2025 could become one of the most challenging years in its history.”
