Tesla (NASDAQ: TSLA)'s stock price has continued to fall recently. As of the close of February 26, its market value has fallen below the $1 trillion mark, closing at $974 billion, a new low since November last year. Since the beginning of 2025, Tesla's stock price has fallen by more than 16%, becoming the worst performing stock among the "seven major technology stocks". Behind this wave of decline is the superposition effect of multiple negative factors.
European market sales halved, exposing weak demand
Tesla's performance in the European market has become the fuse for the stock price plunge. According to data from the European Automobile Manufacturers Association, Tesla's new car registrations in Europe in January 2025 were only 7,517, a year-on-year plunge of more than 50%, while the overall sales of electric vehicles in the EU increased by 34% during the same period. Especially in Germany, France and Norway, Tesla's sales fell by 60%, 63% and 38% respectively. This contrast shows that Tesla's predicament is not caused by the overall downturn in the industry, but the result of the decline in its own brand appeal. Analysts believe that Musk's recent frequent controversial political remarks, especially his support for the new US government, have aroused resistance from European consumers.
The rise of Chinese car companies has changed the global competitive landscape
The strong rise of Chinese electric vehicle brands such as BYD is eroding Tesla's global market share. In 2024, BYD's annual sales will reach 4.27 million vehicles, far exceeding Tesla's 1.789 million vehicles. More importantly, BYD seizes the market with a low-price strategy. For example, models equipped with autonomous driving functions are priced as low as $10,000, while Tesla's similar models start at $32,000. In the Chinese market, Tesla's sales in January fell 33% month-on-month, while BYD's sales increased 41% during the same period. In addition, Chinese car companies such as SAIC Group have seen a 37% surge in sales in Europe, further squeezing Tesla's living space.
Musk's "distraction" and brand image crisis
Tesla CEO Musk's personal behavior is becoming a "double-edged sword" for stock prices. On the one hand, he manages SpaceX, xAI and social media platform X at the same time, and frequently speaks out in the political field, causing investors to question his focus. Tesla's major shareholder Ross Gerber bluntly said: "Musk is 100% devoted to AI, which is far more damaging to Tesla than other businesses." On the other hand, Musk's close relationship with the Trump administration has caused consumer dissatisfaction. For example, American singer Sheryl Crow publicly sold Tesla in protest, and European consumers also shifted their willingness to buy due to political positions. Investors even imitated Musk's "five things" management method and asked him to explain his specific contributions to Tesla in the near future.
Technical bottlenecks and valuation bubbles
Tesla's proud fully autonomous driving (FSD) technology is in controversy. Investors such as Gerber pointed out that Tesla insisted on using only camera solutions and rejected laser radar (LIDAR), causing its autonomous driving safety to lag behind Waymo. The autonomous taxi network plan originally scheduled to be launched in June 2025 was questioned as "too radical" and may not be implemented as scheduled. At the same time, Tesla's high valuation lacks fundamental support - its expected price-to-earnings ratio is 118 times, 5 times that of Toyota and 3 times that of Nvidia. JPMorgan Chase even gave a target price of $135, a potential drop of 60% from the current stock price.
Supply chain and macroeconomic pressure
The external environment has also exacerbated Tesla's predicament. The Trump administration recently imposed a 25% tariff on steel and aluminum, pushing up Tesla's production costs. In addition, the Berlin factory was once shut down due to a shortage of parts caused by the Red Sea crisis, affecting delivery volume. US rental car giant Hertz sold 20,000 Tesla vehicles and turned to fuel vehicles, further undermining market confidence.
Future Outlook: Crisis and Turnaround Coexist
Although Tesla faces severe challenges, some institutions are still optimistic about its long-term potential. Morgan Stanley raised its target price to $430, optimistic about the prospects of its integration of autonomous driving and AI technology. The launch of the new Model Y may stimulate short-term demand, but if it fails to make progress in technological breakthroughs, cost control and brand repair, Tesla's "trillion market value" halo may fade further.
*Disclaimer: The content of this article is for learning purposes only and does not represent the official position of VSTAR, nor can it be used as investment advice.
