Yesterday, Tesla experienced one of the worst days in its stock market history, with a drop of 15.4% that brought the value of its shares to 222.15 dollars, the lowest level since the previous October.
This collapse has resulted in an overall loss of 45% since the beginning of the year, erasing the gains achieved after the re-election of Donald Trump as President of the United States.
Key Points of the Tesla Stock Crash
Decline in sales in China
In February 2025, Tesla sold 30,688 vehicles in China, marking a 49% decrease compared to the previous year. The main causes include the growing competition from local manufacturers, the reduction of state incentives, and the impact of Elon Musk’s public image in Asian markets.
Increasing competition in the EV market
The Chinese electric vehicle market is becoming increasingly competitive. BYD, Tesla’s main rival, recorded a 187% increase in sales, reaching 67,025 units sold in February.
In addition to BYD, Nio and Xpeng are also expanding their market share, pushing Tesla to revise its pricing and production strategies.
Reactions of the financial markets
The collapse of Tesla has had ripple effects across the entire technology sector. The Nasdaq closed with a 4% drop, also dragging down giants like Apple, Meta, and Alphabet. This reflects a growing uncertainty among investors regarding the stability of the tech sector and the EV market.
The impact of Musk’s political choices
The political involvement of Elon Musk has had a significant influence on Tesla’s image, generating controversies that have directly impacted sales and stock value. In particular, his explicit support for Donald Trump during the presidential campaign and after his reelection created a wave of negative reactions in key markets such as Europe and China.
In Europe, the Tesla brand has suffered a strong backlash due to Trump’s positions on environmental, technological, and commercial issues. Countries like Germany and France, historically favorable to the electrification of transport and subsidies for low-emission vehicles, have seen a cooling of demand for Tesla, with some consumers preferring local alternatives like Volkswagen and Renault.
Furthermore, the European institutions are evaluating new trade policies that could penalize the US companies perceived as close to the new USA administration.
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In China, the connection between Musk and Trump has worsened an already complex situation. The trade tensions between the United States and China, reignited after Trump’s reelection, have made Tesla a target of criticism on Chinese social media, with an increase in spontaneous boycott campaigns.
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This, combined with the strong growth of local manufacturers like BYD, has contributed to the drastic decline in Tesla’s sales in the country.
Musk himself has not helped to ease tensions, with often provocative public statements on political and geopolitical topics.
His recent attack on European regulation regarding electric vehicles and his disagreement with certain environmental policies have strengthened the perception of Tesla as a company aligned with a divisive political agenda.
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Future prospects: how can Tesla (TSLA) recover in the bull?
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To reverse the trend, Tesla (TSLA) will need to adopt targeted strategies:
- Reduction of prices and new incentives: Offer targeted incentives and lower prices to maintain competitiveness in key markets.
- Expansion of local production: Strengthen the Gigafactories in China and Europe to avoid tariffs and lower production costs.
- Improvement of the range and innovation: Invest in new batteries and accessible models to attract more customers.
- Diversification of the business: Focus more on software and services related to autonomous driving to differentiate revenue.
Tesla and the EV Market: Global Crisis or Isolated Problem?
Despite the collapse of Tesla, the EV market as a whole continues to grow, with some manufacturers benefiting from the increase in demand and government incentives.
However, the Chinese competition and the slowdown in demand in the United States and Europe could signal a structural change in the sector, with increasingly reduced margins for companies that fail to adapt quickly.
The recent crash of Tesla stocks highlights the challenges that the company must face in a highly competitive market.
To recover, an aggressive strategy on prices, innovation, and local production will be essential..