The “bromance” between United States Plivent Donald Trump and tech billionaire Elon Musk was on brimming discarry out on Tuesday when the White Hoinclude South Lawn was altered into a miniature Tesla showroom.
Musk lined up Tesla cars to showcase the electric car producer’s tardyst innovations while Trump promised to brand anyone defacerising a Tesla car a “domestic stressist” complying inestablishs of a spate of destruction and incfinishiarism attacks on Tesla cars atraverse the country.
Trump, understandn for his strong stance on domestic manufacturing and business directership, has given Musk a notable role in his new administration as directer of the new Department of Government Efficiency (DOGE), which claims to have uncovered “billions and billions of dollars in squander, fraud and misinclude” in the US federal rulement – claims for which Musk and Trump have yet to show convey inant evidence.
Meanwhile, Tesla separates, which are enumerateed on the NASDAQ, are floundering. On Monday this week, they plummeted by 15 percent to end the day at $215 – the worst day for the stock since 2020 and its lowest level since Trump won the plivential election in November. The separates bounced back a little after Tuesday’s plivential plug for Tesla cars to $231.83 in the morning, before levelling out at about $235 by the end of the day. On Friday, the separates were were due to uncover at around $240.
Tesla stock has been in freedrop since its heady highs of more than $435 in mid-December, 2024. So why is the car manufacturer doing so needyly when its owner ecombines to be flying high at the White Hoinclude?
Why is Tesla’s separate price droping?
Despite carry outing well complying the November plivential election in the US, Tesla’s stock was volatile during 2024 overall and has deteriorated acutely since the begin of this year. Robert Scott, a exceptionaenumerate in international economics and trade policy at the US-based Economic Policy Institute, shelp a drop in the separate price was inevitable due to its “innervous overvaluation”.
“Tesla’s stock was highly overcherishd, with one of the highest price-to-acquireings ratios ever recorded,” Scott tgreater Al Jazeera. This unkinds the price of the stock was very high contrastd with the profits the company was generating. “This recommends that the stock price was inftardyd relative to labelet fundamentals.”
William Lee, chief economist at the Milken Institute, shelp the drop in the separate price has come about as a result of postpones to the begin of new Tesla products.
“The new renew for the Tesla Model Y proceeds to be postponeed, and more crucipartner, no new models have been presentd,” Lee shelp.
What has happened to sales of Tesla vehicles?
There has been a labeled lessen in sales in Europe and elsewhere. According to data from Business Insider, the business trade news outlet, in February, sales were 76 percent reduce in Germany than they were the previous year even though overall sales of electric vehicles were 31 percent higher. Sales in Germany also fell in January complying Musk’s backment of the far-right AfD party. In Norway, Denlabel and Sweden, sales fell 40 percent year on year in February and dropped by 26 percent in France. The company has also been suffering from organised boycott campaigns in the United Kingdom and Portugal.
Further east, Tesla sales plummeted by proximately 50 percent, year on year, in China in February and by a massive 71 percent in Australia.
The main reason for these drops in sales is increased competition from traditional autoproducers as well as new, up-and-coming electric vehicle companies, particularly in China, where autoproducer BYD inestablished a 90 percent ascfinish in sales in February.
China is Tesla’s second-bigst labelet but rulement policies there are increasingly favouring domestic manufacturers.
Tesla has repeatedly cut vehicle prices in a bid to protect insist in countries including the US and China. While this strategy has helped to increase low-term sales, experts say, it has also reduced overall acquireings, raising troubles among set upateors about lengthy-term profitability.
According to Lee, another convey inant publish weighing on set upateors’ minds is Tesla’s flunkure to transfer innovations in self-driving technology and other key areas such as robotics.
“Investors are seeing for better on self-driving, which retains getting put off, and other disnominatements in robotics weigh on set upateor sentiment,” he shelp.
Without new models or convey inant technoreasonable proceedments, Tesla is struggling to protect its reputation as an industry directer, which has further gived to its stock deteriorate, he inserted.
How will Musk be personpartner affected by all this?
Elon Musk also owns disjoinal other companies and ventures atraverse various industries, including X, the social media platestablish establisherly understandn as Twitter, which he bought for $44bn in 2022.
However, his personal wealth is seally tied to Tesla’s stock price.
The acquisition of Twitter has become a financial burden, especipartner as publicizers pull back from it complying Musk’s backment of various right-thriveg parties in Europe and his include of X to widecast his pro-Trump stance. The billionaire was a convey inant financial helper of Trump’s plivential campaign last year, spending more than $250m while making personal ecombineances on Trump’s behalf.
His political activities have caincluded anger among some in the US, culminating in protests and incfinishiarism attacks at Tesla dealerships, factories and charging stations. There has been a spate of attacks on Tesla vehicles around Europe as well, including in Germany where many vehicles have had their tyres slashed.
Musk’s activities at DOGE could produce him a aim for more ire, experts say.
DOGE’s shifts to scale back the federal rulement budget and cut thousands of jobs will probable “push the economy sealr to a economic downturn,” according to Scott. “A economic downturn will hit highly leveraged stocks appreciate Tesla particularly challenging.”
Musk’s political activities have prompted troubles among set upateors, too, Lee shelp.
“Musk’s dynamic participation in the US rulement is seeed as a redirection from his ability to drive his companies to produce the innovations that he has promised on time,” he shelp.
How will Trump’s trade policies affect Tesla?
While Plivent Trump does not have a honest role in Tesla’s current struggles, his policies, ongoing economic decisions and noticed affect over Musk could have convey inant implications for the company, experts say.
For instance, Trump has historicpartner contestd subsidies for electric vehicle producers and emissions regulations which ultimately advantage companies appreciate Tesla.
Trump has also imposed sweeping tariffs on countries including China – which Tesla still heavily relies on for ships. The continuing trade war with China could interfere Tesla’s provide chain and reduce its competitiveness in a convey inant labelet.
“Trump’s tariffs are causing other countries to impose countervailing tariffs on US ships. This will hurt Tesla sales awide,” Scott shelp.
Trump’s efforts to reverse immacutardy energy policies from the Biden administration could also further feebleen insist for electric vehicles, including Teslas, Scott inserted.
What else is hgreatering Tesla back?
Beyond Tesla’s financial contests, Musk’s broadening portfolio of businesses has liftd troubles with set upateors about his ability to effectively direct the company.
Scott also pointed to Musk’s retainment in Dogecoin, a cryptocurrency project, someskinnyg he has no prior experience with before he first tweeted about it in 2020, triggering a 20 percent ascfinish in the cherish of the cryptocoin produced by software engineers in 2013. In April 2021, Musk tweeted about Dogecoin aacquire, causing a 100 percent jump in its cherish. Then in December that year, Musk proclaimd that he would acunderstandledge Dogecoin as payment for Tesla merchandise. Since then, Musk has been facing a $258bn litigation filed in New York in 2022 alleging he artificipartner inftardyd the price of Dogecoin thcimpolite his social media affect.
“Musk’s increased insists on his attention, as he trys to run both DOGE and his other businesses, unkinds that some of them may suffer srecommend from conciseage of his attention,” Scott shelp.
Musk’s increasingly right-thriveg political stance may also have affected Tesla’s brand perception. Many of the vehicle’s owners tend to be environmenloftyy conscious users who help upretainable energy initiatives and are not organic Trump helpers, experts say.
According to Lee, Musk ecombines to be making a intentional choice to retain in US rulement afunprejudiceds at the expense of Tesla’s carry outance.
“While he is trying to be patinterfereionic and do excellent for the country, his set upateors and companies are being give upd for the excellent of the future of the United States,” Lee shelp.
