Tesla’s stock tumbled 8% on Tuesday, pushing its market value below $1 trillion for the first time since November after weak European sales raised concerns about slowing demand.
The European Automobile Manufacturers Association reported a 45% decline in Tesla’s January sales across the region, even as overall EV sales in Europe grew by 37%.
The drop highlights growing challenges for Tesla as it struggles to maintain momentum following a decline in global deliveries last year. Investors are increasing pressure on CEO Elon Musk to accelerate the rollout of lower-priced models and autonomous vehicles, which he has described as central to Tesla’s future.
With Tuesday’s decline, Tesla shares fell to $305, leaving its market capitalization at $981 billion. Despite the drop, Tesla remains worth more than twice the combined value of General Motors, Ford, Volkswagen, Toyota, Hyundai, and BMW.
However, some investors are concerned that Musk’s role in overseeing a proposed federal government downsizing under U.S. President Donald Trump could divert his focus from Tesla.
Concerns over Tesla’s heavy investment in artificial intelligence are also weighing on the stock, alongside broader investor uncertainty ahead of AI chip leader Nvidia’s quarterly report on Wednesday. Similar worries have impacted Microsoft and Meta, which have also been aggressively expanding AI-related investments.
Tesla’s stock currently trades at 112 times expected earnings, well above its five-year average price-to-earnings ratio of 93. By comparison, Ford trades at eight times earnings, while GM trades at seven.
Despite the recent dip, Tesla shares remain up 51% over the past 12 months, though the stock has declined 24% year-to-date.
Tesla is moving forward with plans for a more affordable electric vehicle and a paid autonomous car service, which Musk has positioned as key to the company’s future growth.
