Elon Musk’s Political Moves Lead to Decline in Tesla Car Sales – Stock Drops 3.6%

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Tesla’s Market Share Shrinks in the U.S. and Europe Amid CEO’s Political Controversy

Tesla, the leading electric vehicle (EV) manufacturer led by Elon Musk, has witnessed a significant decline in new car sales and market share in both the United States and parts of Europe. This downturn has directly impacted Tesla's stock price, which dropped more than 3% in U.S. trading.

On February 5 (local time), Tesla shares closed at $378.17 on the New York Stock Exchange, down 3.58% from the previous day. This price is 21% lower than the record high of $479.86 reached on December 17, 2024. Analysts attribute the stock decline to reports of falling Tesla sales in key markets such as Germany and California.

According to data from Germany’s Federal Motor Transport Authority, cited by Bloomberg, Tesla's new vehicle registrations in January 2025 plummeted by 59% compared to the same period last year. This marks the lowest registration figure since July 2021, underscoring a sharp downturn in Tesla's German market performance. Bloomberg analysts suggest that Musk's increasing involvement in political issues may be a key factor behind this decline.

Elon Musk has recently positioned himself as a prominent political figure, aligning with former U.S. President Donald Trump and voicing support for far-right political movements in Europe. His controversial statements and endorsements have sparked backlash, particularly in Germany. Ahead of the German federal election, Musk appeared in a video supporting the far-right Alternative for Germany (AfD) party, stating, “There is nothing wrong with Germans taking pride in their nation,” and criticizing what he described as excessive guilt over historical events.

Tesla’s struggles are not limited to Germany. In the United States, sales have been falling in California, traditionally a stronghold for the EV maker. According to the California New Car Dealers Association, Tesla's new vehicle registrations in the state declined by 7.8% year-over-year in Q4 2024. This marks the fifth consecutive quarter of declining sales. Tesla’s overall market share in the California EV segment also dropped significantly, from 60.1% in 2023 to 52.5% in 2024—a decrease of 7.6 percentage points.

Financial media outlet Barron’s reports that investors are increasingly concerned that Musk’s political stance may be negatively affecting Tesla’s brand and sales performance. While direct causation remains difficult to prove, the downward trend in key markets suggests that consumers in California and parts of Europe may be distancing themselves from Tesla due to Musk’s political affiliations.

With Tesla's market share shrinking and competition in the EV sector intensifying, the company faces mounting pressure to counteract these sales declines. Whether Musk’s political engagement will continue to impact Tesla’s business performance remains a key concern for investors moving forward.

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