Falling Sales and a Detached CEO, Tesla Crashes

Tesla plunges on the stock market after the collapse of its sales in Europe, and the antics of its incendiary CEO Elon Musk do not help.

The Tesla stock price has plummeted by more than 9% after announcing a sharp drop of nearly 50% in sales in January in Europe. This decline brings the company’s valuation below the symbolic threshold of $1 trillion, a first since November 2024. Year-over-year, the stock still shows a gain of 51.86%, but beware of the snowball effect. A correction from the frenzy at the end of 2024 would not be surprising.

Tesla faces its demons

Unfortunately for Tesla, this scenario seemed inevitable. Competition in Europe has become fierce, especially with the rise of Chinese manufacturers like BYD, who offer well-equipped vehicles at competitive prices. Meanwhile, Elon Musk, the charismatic but controversial CEO of Tesla, continues to attract attention, but not always for the right reasons. His political stances, often polarizing, irritate as much as they fascinate. Supporting far-right figures, whether in the UK or Germany, or showing closeness to Donald Trump, does not work in Tesla’s favor in a market where consumers favor brands perceived as progressive and committed to the future. This disconnect between Musk’s image and the expectations of European customers has weighed heavily, with his provocations appealing to a certain audience, but certainly not to those who buy Teslas.

Structurally, the drop in sales in Europe was predictable. The explosive growth of Tesla’s early days has given way to a period where innovation alone is no longer enough. The company must now contend with well-armed competitors, more demanding consumers, and a changing market dynamic. However, a successful launch of the new Model Y could provide some relief, similar to what the Model 3 Highland accomplished.

For Tesla, this situation illustrates the challenges of leadership that, while bold, sometimes fails to anticipate the consequences of its own actions.

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