πππTesla $Tesla Motors(TSLA)$
Why are Tesla's shares down?
There are several factors that have negatively impacted Tesla's shares. One of the main reasons can be attributed to CEO Elon Musk's role as Head of DOGE, the Department of Government Efficiency. Elon Musk himself has admitted that he has found it hard to run his businesses and DOGE during an interview with Fox Business' Larry Kudlow.
Elon Musk has been culling tens of thousands of jobs as part of a huge plan to shrink the government and slash federal spending. This large scale purge of public servants, coordinated by DOGE, may end up creating one of the biggest employment cuts in US history.
Another factor is Tesla sales have dropped globally. New data from the KBA - Germany's Federal Motor Transport Authority shows that in January 2025, Tesla sales plummeted by 59.5%, with just 1,277 new cars registered in Germany. The situation worsened in February. Sales were down a staggering 76.3% compared to February 2024 with just 1,429 units sold. Tesla's decline is even more pronounced when you consider that overall BEV sales in Germany climbed 30.8% in February.
In Norway Tesla sales collapsed by 44.4% through January and February. This is despite Norway's overall EV market growing by 53.4%.
In Australia, data from Australia's Electric Vehicle Council shows that Tesla sold 1,592 vehicles in February, a massive decline of 71.9% from 5,665 sold in February 2024. The first 2 months of 2025 saw Tesla delivering 2,331 vehicles in Australia, a 65.5% decline from the 6,772 vehicles sold over the same period in 2024.
In China, things are also looking grim for Tesla. Preliminary data from China's Passenger Car Association revealed that Tesla built and sold 30,688 vehicles in February 2025. This is a 49.16% drop from the 60,365 vehicles sold in February 2024. This includes both domestic sales and exports. It is clear that Tesla's Chinese market share is shrinking.
While Tesla remains a leader in the EV space, its once unassailable dominance in key markets is showing signs of distress.
Another factor to consider is Tesla's Q4 24 earnings report released on January 30.
For Q4 24 Tesla reported that it earned USD 2.3 billion in net income on USD 25.7 billion in revenue. That represents a 1.9% increase year over year compared to USD 25.2 billion in revenue in Q4 23 and a 70% decrease in net income. Analyst consensus predicted USD 27.26 billion in revenue, according to an average of estimates compiled by LSEG. For the full year, Tesla said that it earned USD 7.1 billion in net income on USD 97.7 billion in revenue. This is a 6% decrease compared to 2023.
Tesla said that its plans for new vehicles which includes more affordable models remain on track for production in the first half of 2025. Investors have repeatedly asked Tesla about its plans to release more affordable model although it is unclear whether it will be an entirely new model or a more affordable Model 3.
Recently there have been at least a dozen vandalism against Tesla vehicles, dealerships or charging stations according to police and local reports in the US. This is due to the backlash Elon Musk has faced since taking on the DOGE role in the Trump administration.
In addition to all of the above, there have been concerns about high inflation, rising interest rate and intense competition in the EV markets.
Wall Street Analysts are mixed on Tesla with an average Target price of USD 213.71 and a consensus recommendation of Hold.
Tesla has a current P/E ratio of 122.11 which is the highest among the Magnificent 7 stocks. In contrast $NVIDIA(NVDA)$
However Tesla is more than just an EV company. Elon Musk called a all- hands meeting on March 21 to urge Tesla employees to hold on to their stock despite rocky moments. He said that Tesla aims to scale production of its future on Robotics and Autonomous Driving.
I believe that if Elon Musk can turn back the clock, he should have not taken such a major role in DOGE. This is primarily the main reason why Tesla's shares have plummeted so much recently. Elon Musk definitely needs to spend more time on Tesla to boost its sales. My sentiment is shared by many Tesla invrstors. Dan Ives of Wedbush said the first step for Musk is to show that he is going to lead Tesla through this tumultuous period. He also warned that the brand damage has escalated into a "tornado crisis moment for Musk and Tesla".
If Elon Musk refocuses his energy on Tesla once again, I believe that Tesla would definitely be a Buy. Until then I would watch on the sidelines to see how things unfold.
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