Los Angeles, California – After seeing Tesla stock drop by more than 15%, US President Donald Trump has declared his intention to purchase a new Tesla in support of Elon Musk, the company’s owner. Trump attributed the decline in Tesla shares to boycotts by “radical left lunatics,” aiming to harm Musk and his company. However, stock analysts have pointed towards concerns over Tesla meeting production targets and a decrease in sales as the main factors impacting the stock performance.
The fear surrounding Tesla’s ability to deliver on production goals combined with a drop in sales over the past year has contributed to the stock’s poor performance. Additionally, analysts have noted that investors are becoming increasingly uneasy about the economic implications of Trump’s tariffs, leading to a significant sell-off in US markets.
Following Trump’s remarks, Tesla shares experienced a boost of about 5% in premarket trading. Despite Trump’s pledge to purchase a new Tesla, his policies have previously aimed to curb electric car sales, including revoking a 2021 order by former President Joe Biden that half of all car sales should be electric by 2030. Trump’s tariffs may also impact Tesla’s profitability, particularly affecting parts sourced from Canada and Mexico.
While Trump commended Musk for his work, he criticized “radical left lunatics” for allegedly attempting to boycott Tesla unlawfully. Trump’s show of support for Musk comes amid Tesla shares returning to pre-election levels after experiencing a spike following Trump’s victory. Despite the political controversy surrounding Musk, experts argue that the decline in Tesla’s share price ultimately boils down to fundamental factors such as dwindling new orders in key markets like Europe and China.
In Europe, Tesla sales have dropped significantly, with a 45% decrease in January compared to the same month in 2024. The European Automobile Manufacturers’ Association (ACEA) reported a decline in Tesla sales across the continent. Concerns over Tesla being overvalued and facing increased competition from Chinese electric vehicle companies have also contributed to the stock’s correction.
Moreover, investors have raised worries about Musk’s divided focus, as he juggles responsibilities between Tesla, SpaceX, and the social media platform X. Musk’s businesses have faced challenges, with SpaceX encountering setbacks in recent rocket launches and X experiencing technical issues. As Tesla navigates through a challenging period, analysts emphasize the importance of balancing Musk’s political affiliations with the company’s financial performance to ensure long-term sustainability.