Running out of Juice: How Politics, Competition, and Controversy Are Driving Down Tesla’s Share Prices 

Once the darling of Wall Street and the undisputed king of electric vehicles, Tesla now finds itself navigating turbulent waters. Since peaking at nearly $480 in December, Tesla’s share price has plummeted by 45%, erasing over $116 billion from Elon Musk’s net worth. In fact, Tesla’s share price is down 30% year-on-year, a testament to the troubled times the brand finds itself in. 

This dramatic decline represents more than just a market correction. This is something born of a perfect storm of political controversy, increasing competition, and brand damage that threatens Tesla’s position as the world’s most valuable automaker. 

The Politics of Distraction 

The decline coincides precisely with Elon Musk’s increased political activity. After betting approximately $290 million on Donald Trump’s successful presidential campaign, Musk has become a de facto member of the Trump administration. He now heads the Department of Government Efficiency (DOGE)—named after a cryptocurrency meme—and has taken up office in the White House West Wing. 

This political pivot has alienated a significant portion of Tesla’s customer base, particularly in Europe and progressive American markets. While Tesla initially saw its stock skyrocket after Trump’s election victory, the shares have since lost 96% of those post-election gains. Most notably, the majority of these losses have occurred since Trump’s inauguration in January. 

Musk’s slash-and-burn approach to government reform, including widespread firings of government employees and shuttering of agencies, has generated substantial backlash. His high-profile appearances at Cabinet meetings, photo opportunities in the Oval Office, and theatrical performances at the Conservative Political Action Conference (CPAC)—where he wielded a chainsaw—have increasingly tied the Tesla brand to divisive political movements. 

European Sales Collapse Amid Far-Right Affiliations 

Perhaps nowhere has the impact of Musk’s political activities been more pronounced than in Europe. Tesla’s European registrations plunged by 45% in January 2025 compared to January 2024, according to the European Automobile Manufacturers’ Association. This decline is particularly striking given that overall electric vehicle sales in the region increased by 37% during the same period. 

The most dramatic collapse has been in Germany, where Tesla operates its Gigafactory Berlin. German deliveries of new Tesla vehicles have plummeted by 76%, while EV registrations overall rose by 31%. This precipitous drop follows Musk’s public support for Alternative für Deutschland (AfD), a far-right party that has been criticized for using Nazi slogans and trivializing the Holocaust. 

Musk further inflamed tensions by suggesting that Germany needs to “move beyond” past guilt during a virtual appearance at an AfD campaign event. The backlash was swift and severe. The Polish government called for a boycott of Tesla vehicles, while protestors projected an image of Musk’s controversial straight-armed gesture alongside the word “Heil” onto the Berlin Gigafactory. In London, a satirical bus stop advertisement branded Tesla as a “Swasticar.” 

The backlash isn’t limited to Germany. Tesla sales have dropped by 48% in Norway, 42% in Sweden, and a staggering 72% in Australia—all markets where environmental concerns and progressive politics have traditionally driven EV adoption. 

The Controversial Salute 

The most damaging moment for Tesla’s brand came during Trump’s inauguration celebration on January 20, when Musk made a Nazi-style salute that has since become a lightning rod for criticism and protest. In the UK, a guerrilla poster campaign with the slogan “0 to 1939 in 3 seconds” explicitly connected Tesla to fascist imagery. In Germany, Musk was caricatured on a carnival float as “Napo-Elon.” 

Protests have erupted outside Tesla showrooms across the United States. In Milan, Extinction Rebellion activists recently occupied a Tesla store, chaining themselves to car tires and gluing themselves to windows alongside slogans like “Make millionaires pay again” and “Ecology for all, no ecofascism.” 

These protests reflect a fundamental shift in perception. Tesla, once synonymous with environmental consciousness and progressive values, now finds itself increasingly associated with right-wing politics and controversial historical references. 

Rising Competition in a Maturing Market 

While Musk’s political activities have dominated headlines, Tesla also faces intensifying competition in the global EV market. In Europe, Chinese manufacturer SAIC Motor (whose brands include MG) saw sales increase by 36.8% in January—the largest gain of any automaker—while Tesla suffered the largest decrease. 

In China, Tesla’s second-largest market after the United States, the company’s sales have declined by 29% this year. Tesla faces particularly fierce competition from BYD and other domestic manufacturers offering more affordable alternatives. Sales of China-made Teslas dropped 49% year-on-year in February, reaching their lowest level since August 2022. 

The company that once enjoyed unchallenged dominance of the electric vehicle market now finds itself struggling to maintain market share against increasingly sophisticated competitors with lower price points. 

Valuation Concerns 

Despite these challenges, Tesla remains valued at approximately $847 billion—more than the next ten automakers combined. However, analysts increasingly question whether this valuation reflects reality. JP Morgan suggests Tesla’s share price could fall as low as $135, reducing the company’s valuation to around $400 billion. They noted that “Tesla shares continue to strike us as having become completely divorced from the fundamentals,” pointing out that 2025 profit expectations have decreased by 70% since 2022. 

UBS similarly stated that Tesla’s valuation “continues to confound us,” highlighting significant risks in the company’s efforts to monetize self-driving technology or humanoid robots. These analyst concerns reflect growing skepticism about Tesla’s ability to maintain its premium market position amid increasing competition and brand challenges. 

What’s next? 

Tesla was the world’s largest producer of battery electric vehicles in 2024, but its sales dropped to 1.79 million—the first annual sales decline since 2011. While the company has projected growth for 2025, and analysts expect sales of more than 2 million vehicles, this represents a significant downgrade from Musk’s October statement projecting 20-30% annual growth. 

For Tesla, the path forward requires navigating multiple challenges simultaneously: repairing brand damage in key markets, countering rising competition, and managing the increasingly divisive political profile of its CEO. Whether Tesla can weather this perfect storm while maintaining its position as the world’s most valuable automaker remains to be seen. 

As one of the most polarizing figures in both business and politics, Elon Musk’s actions have made Tesla much more than just a car company—it has become a cultural and political symbol whose fortunes are increasingly tied to the controversial activities of its CEO who is growing increasingly polarising by the day.