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Tesla Stock Takes a Hit
Tesla’s share value experienced a significant drop on Monday, marking its lowest point since the pre-election period. Investors were reacting to the combined effects of dwindling sales and the growing controversy surrounding Elon Musk’s political involvement.
By the end of the trading session, Tesla’s stock had fallen by over 15% for the day. This represents a more than 50% decline from its peak in mid-December. It was Tesla’s largest single-day loss since 2020, notably exceeding the 2.7% decrease in the S&P 500 on the same day.
Decline in Stock Value
Following the election of Donald J. Trump as president and Elon Musk’s subsequent role as an unofficial advisor on government austerity, Tesla’s shares saw a significant rise. However, this surge has now dissipated, resulting in a loss of over $700 billion in market value.
Investors initially anticipated that Musk’s financial support for Trump’s campaign and his connections to the White House would benefit Tesla, particularly in navigating regulatory challenges related to autonomous driving technology. In contrast, Musk’s prominent presence in Washington has become a concern. There is growing unease among investors about Musk’s commitment to Tesla amidst declining car sales.
Protests and Backlash
Tesla has faced mounting protests due to Musk’s prominent role in cutting jobs, including those of park rangers and other public servants, while reducing foreign aid and other programs. Recent incidents include the arson of Tesla charging stations near Boston, gunfire at a dealership in Oregon, and arrests during a nonviolent protest at a Tesla dealership in Lower Manhattan.
These political controversies are partly blamed for the poor sales performance in Europe last month, with Tesla sales in Germany dropping by 76%—Germany being Europe’s largest car market. Musk’s support for far-right political parties, including in Germany, further complicates matters.
Challenges in the Automotive Market
Analysts also point to a lack of new models and increasing competition as factors contributing to Tesla’s sales decline. In January, Volkswagen surpassed Tesla in electric vehicle sales outside of China, according to data released by SNE Research, a South Korean research and consulting firm.
While Tesla might be less affected by the trade disputes initiated by Trump compared to other automakers, the company could still suffer from deteriorating relations with China. Tesla’s largest factory is located in Shanghai, producing vehicles for both the Chinese market and export to Europe and other regions.
Source: www.otomobilhaber.com
