Tesla’s stock saw a substantial drop on Monday, falling over 10% to $214.80.
Just weeks ago, Commerce Secretary Howard Lutnick boldly claimed on Fox News that Tesla’s stock “will never be this cheap again.” Clearly, that prediction has proven to be premature.
While the broader equity markets are facing challenges, Tesla’s struggles are standing out. So, what’s driving the decline, and why are investors now approaching the electric vehicle giant with more caution?
One of the key reasons is that even some of Tesla’s most ardent supporters are starting to reassess their positions. Daniel Ives, a long-time Tesla bull at Wedbush Securities, recently slashed his price target for the stock by 43%.
Ives cited two primary factors: the impact of President Trump’s trade policies and a growing crisis surrounding Tesla’s brand, which has been amplified by CEO Elon Musk’s political involvement. This marks a significant shift from Ives’ previous optimistic outlook.
Ives isn’t alone in revising his expectations. Other analysts have followed suit, pointing out that Musk’s controversial public persona is taking a toll on the company’s image and its relationship with consumers.
But that’s not all. Tesla’s first-quarter vehicle deliveries came in below even the lowered expectations, marking the weakest performance since 2022. This has led to questions about whether Tesla can maintain its aggressive growth targets.
JPMorgan’s Ryan Brinkman summed it up by saying the damage to Tesla’s brand could be deeper than many analysts originally anticipated. When Tesla’s stock was rising rapidly last year, investors were buoyed by the optimism around President Trump’s election victory and Musk’s connections to the administration.
However, Musk’s increasing involvement in political controversies appears to have alienated some consumers, and that’s putting more pressure on Tesla’s stock.
Then, there’s the tariff issue. While Tesla’s international presence offered some protection from the 25% tariffs imposed on imported vehicles, Musk has warned that the tariffs could still affect the company’s operations and global supply chain.
According to Ives, these tariffs could undermine Tesla’s competitive edge, especially with Chinese EV manufacturers like BYD, Nio, and Xpeng gaining ground. If Chinese consumers start shifting toward domestic brands, it could be a serious challenge to Tesla’s market share in China, a key region for the company.
So, where does this leave Tesla? The company is facing several headwinds, both external and internal. While Tesla remains a key player in the electric vehicle market, it’s clear that the path ahead will be more challenging.
The next few months will be crucial in determining whether Tesla can regain its footing or if it will continue to struggle.
