Tesla‘s stock faced a significant decline on Monday, falling more than its megacap technology peers following the announcement of new tariffs by President Donald Trump. The electric vehicle manufacturer ended 2024 with a staggering 10,600 unsold Cybertrucks, a situation attributed to excessive production and dwindling demand. Additionally, the company is grappling with a sharp drop in vehicle registrations across key European markets.
The recent tariff situation has raised concerns for Tesla’s profitability. During the earnings call last week, Chief Financial Officer Vaibhav Taneja expressed apprehensions about potential impacts from the new administration’s policies, stating, “Over the years, we’ve tried to localize our supply chain in every market, but we are still reliant on parts from across the world for all our businesses.” The imposition of 10% tariffs on goods imported from China, where Tesla manufactures approximately half of its vehicles, further complicates matters.
Decrease in Vehicle Registrations in Europe
The decline in registrations is particularly pronounced in France, Sweden, and Norway. In France, registrations plummeted by 63% in January compared to the same month in the previous year. Similarly, Sweden and Norway reported drops of 44% and 38%, respectively. These figures reveal a concerning trend in one of the largest markets for electric vehicles in Europe.
In response to these challenges, Tesla has made moves to stimulate sales. Over the weekend, the company reduced lease prices for its base Model 3 sedan and unpainted steel Cybertruck vehicles. This pricing strategy aims to attract more customers amid a competitive landscape.
Tesla’s stock performance on Monday reflects broader market dynamics. While Tesla shares dropped significantly, Apple’s stock experienced a decline of over 3%, indicating that tech stocks are facing pressures across the board. However, Tesla’s situation appears more precarious given its current inventory issues and market conditions.
In addition to the immediate market challenges, Tesla’s brand value has taken a hit as well. According to consulting firm Brand Finance, it fell by 26% in 2024. This decrease highlights the mounting pressures on the company amid evolving market conditions and consumer preferences.
Despite these headwinds, Tesla remains committed to its production capabilities. The company operates factories in the U.S., Berlin, and Shanghai, which allows it to navigate some of the difficulties other electric vehicle manufacturers face. However, analysts project modest sales numbers for the Cybertruck in 2025, estimating around 21,000 units sold.
What The Author Thinks
Tesla’s recent struggles reflect the vulnerability of even the most innovative companies to macroeconomic forces such as tariffs and market fluctuations. While Tesla’s aggressive production and price adjustments aim to mitigate some immediate concerns, the long-term challenges of sustaining growth and profitability in a rapidly evolving market are evident. Tesla’s ability to adapt to these changes while maintaining its pioneering spirit will be crucial for its future success.
