Tesla’s stock has taken a significant hit in early 2025, with investors shifting their attention from Elon Musk’s political ties to the company’s financial performance. Since reaching a record high of $485.20 on December 18, 2024—shortly after Donald Trump’s election victory—the stock has tumbled 28%, closing at $349.18. This decline has made Tesla the worst performer among the “Magnificent Seven,” a group that includes tech giants like Meta, Amazon, Microsoft, Nvidia, Google, and Apple.
Investor Sentiment and Market Indicators
Initially, optimism surged as Musk’s vocal support for Trump fueled speculation that regulatory approvals for driverless cars and other industry benefits could accelerate. However, that enthusiasm has since cooled, with Tesla’s stock falling below its critical 50-day moving average. Market analysts are now watching the $334 mark, Tesla’s 100-day moving average, as a key level of investor sentiment. If the stock dips further, it could test its 200-day moving average at $286.
Sales Struggles in Key Markets
One of the primary factors weighing on Tesla’s stock is weaker-than-expected sales in key international markets. Fresh data from the China Passenger Car Association (CPCA) reveals that Tesla sold 63,238 vehicles in China in January, a sharp 33% decline from December. Similarly, Australia’s Electric Vehicle Council (EVC) reported a 33% drop in Tesla’s year-over-year sales for the same month.
Some analysts believe Musk’s close association with Trump may be eroding Tesla’s brand appeal in international markets, particularly in regions where trade relations with the U.S. remain sensitive.
Policy and Tariff Challenges
Adding to Tesla’s woes are new trade policies under the Trump administration. This week, the president signed executive orders imposing 25% tariffs on steel and aluminum—two key materials in Tesla’s manufacturing process. Additionally, Tesla’s heavy reliance on Chinese suppliers presents another challenge, as a 2023 Nikkei study found that 40% of the materials used in Tesla’s batteries come from China. The ongoing trade war between the U.S. and China could further disrupt supply chains and increase costs.
Tesla acknowledged these risks in its latest 10-K filing, noting that “changes in government and economic policies, incentives, or tariffs may impact production, sales, cost structure, and the competitive landscape.”
Disappointing Earnings and Analyst Downgrades
Tesla’s financial performance in the fourth quarter of 2024 also left investors underwhelmed. The company reported earnings per share (EPS) that missed expectations by a cent, while automotive sales dropped 8% year over year due to price reductions across Tesla’s vehicle lineup.
George Gianarikas, managing director at Canaccord Genuity, described the earnings report as “lackluster,” noting concerns about missed delivery guidance, weak margins, and delays in the full self-driving rollout in Europe and China.
In response to these concerns, analysts have been lowering their EPS estimates for Tesla for both 2025 and 2026. JPMorgan analyst Ryan Brinkman remains one of the most bearish voices on Tesla, maintaining an “Underperform” rating with a $135 price target. He warns that Tesla’s stock could be at risk of further declines due to deteriorating fundamentals and unpredictable catalysts.
The Road Ahead
Looking forward, Tesla faces mounting challenges, including slowing demand, increased competition, and regulatory uncertainties. While the company continues to lead in electric vehicle innovation, the market’s recent reaction suggests that investors are more focused on execution and financial stability than political connections. Whether Tesla can regain its footing will depend on how it navigates these headwinds in the months ahead.
