Tesla’s postelection stock surge has nearly evaporated. Shares of the electric vehicle maker plunged over 8% on Tuesday, pushing its market cap below $1 trillion and to its lowest since Nov. 7, shortly after President Donald Trump’s election win. The stock has plummeted 25% this year, while the Nasdaq is down just 1.5%. It has also dropped over 35% from its record close on Dec. 16. CEO Elon Musk has seen his net worth decline by over $100 billion during this period, though he remains the world’s richest person with a fortune of about $380 billion.
The recent decline followed a Reuters report indicating disappointment among Tesla owners over the company’s long-awaited upgrade to its partially automated driving systems. Many users in China expressed dissatisfaction with Tesla’s “navigate on city streets” feature, which they feel falls short of Musk’s promises for self-driving technology. Competitors like BYD and Xiaomi offer similar systems for free or at a much lower cost.
Concerns among Tesla shareholders have been compounded by Musk’s focus on leading President Trump’s Department of Government Efficiency (DOGE) in Washington, D.C., where he has gained significant access to government systems. Additionally, protests against Musk’s political rhetoric have targeted Tesla stores, and the company’s stock was affected by Trump’s announced tariffs on goods from Canada, Mexico, and China.
Tesla’s Q4 earnings and sales missed analysts’ estimates, with automotive revenue dropping 8% year-over-year and operating income falling 23%. The company cited reduced average selling prices across its vehicle lineup as a key factor. Tesla sales in California, its largest domestic market, dropped 11.6% in Q4 2024. Despite these challenges, Tesla shares remain about 20% above pre-election levels, largely due to a 15% jump the day after the election.
— news from CNBC