Tesla (TSLA) stock has often gone against the grain. It has the highest stock price of any EV producer but has also come back from every stock slide in its history.
However, shares of the EV manufacturer have spiraled by as much as 50% from the record highs in mid-December 2024 when they peaked at $480 per share. The loss equates to more than $800 billion in vaporized market capitalization in just three months.
Some analysts feel like this most recent slide is different than before. Why did Tesla stock fall so much and could this be a good time to buy?
Why Did Tesla Stock Fall So Much?
Concerns over tariffs slapped onto Tesla parts and a steep decline in deliveries hurt Tesla stock dramatically.
There was a perception immediately after the November 2024 presidential election that CEO Elon Musk’s ties to President Donald Trump would help Tesla. Those opinions were proven accurate when the share price rose to record levels a month later.
Tesla then tumbled below $400 per share in early February 2025. The automaker was one of the worst-performing stocks on the S&P 500 in the first three months of the year.
One reason for the slide is that the electric vehicle market has declined sharply entering 2025. That doesn’t bode well for Tesla, which sold 200,000 fewer vehicles in 2024 versus 2023.
Three months into 2025, EV sales dropped from record sales last December. January saw 102,243 EVs sold in the United States, down 29% from the previous month. February’s sales were down nearly 6% from January, with 95,692 EVs sold.
Tesla’s competition is also heating up in Europe and China. New EV registrations in the EU have been up in 2025. But the American EV brand saw declining sales in Europe. China, once the darling for Musk, now has its own domestic EVs coming online.
BYD (BYDDY) can surpass the American import in sales in 2025. Tesla sales declined in China 50% year-over-year in February 2025.
Is Tesla CEO Elon Musk Distracted by Politics?
Investors in January and February were worried that Musk was too distracted by politics to run his company. The CEO spent a good portion of 2025 running the Department of Government Efficiency for the Trump administration. Musk has pledged that, per government regulations, he will step down from his position sometime in May.
During the time Musk was running DOGE, Tesla stock lost a third of its value. The CEO himself lost $121 billion of his own net worth.
Yet, he still plans to launch a driverless taxi service in Austin, Texas, in June. Musk said during Tesla’s fourth-quarter earnings call that his company’s self-driving software requires hardware upgrades. Those may very well delay the plans for robotaxis, depending on how the upgrades go.
But Waymo, a division of Alphabet (GOOG), already has its robotaxis on Austin city streets so Tesla has some catching up to do on this project.
Meanwhile, Tesla dealerships are making headlines due to the so-called “Tesla Takedown” protests from people upset at Musk’s actions with DOGE. As many as 400 people showed up to one outside of a Tesla showroom in Ann Arbor, Michigan.
Not all of the protests have been peaceful. One Idaho man was arrested for allegedly striking a counter-protester with a car. A dealership in Rome, Italy, was destroyed by an arson fire with 17 EVs burned. So, Tesla’s reputation is taking a hit, which has also lowered the share price.
Tesla’s 2025 Delivery Targets Are Down
Politics aside, analysts predict delivery estimates between 315,000 and 369,000 units in Q1 2025, much lower than the 386,810 units from a year ago.
Analysts from Stifel predict deliveries of 353,418 cars, a downgrade from the previous predictions of 458,672. If these numbers hold, deliveries will be the lowest since 2022. Last year, the automaker suffered its first-ever annual drop in sales.
Lower deliveries could hurt Tesla stock in the short term. However, many analysts remain bullish on the most popular EV brand in the United States.
Lucid Motors (LCID) is looking to capitalize on anti-Tesla sentiment, especially in California. It’s set to release a new SUV in late April. However, don’t look for this relatively small EV maker to overtake Tesla anytime soon. Tesla has been losing market share since 2020, but that’s likely because more automakers have less expensive EVs on their lots.
Tariffs Both Help & Harm Tesla
Imported vehicles may have to raise prices if tariffs got into effect in April. Tesla vehicles contain substantially more American-made parts than rivals. Plus, every US-sold Tesla is assembled in the United States.
Rivals, such as Mustang Mach-E, a sporty SUV, and Hyundai’s IONIQ 5, are assembled in Mexico and South Korea, respectively. As such, their prices will likely rise more than a Tesla, which imports 30 to 40% of its parts.
Some EVs could go up in price by as much as $12,000 due to tariffs. American-assembled EVs subject to the $7,500 federal incentive would be a much more attractive option for buyers.
In that respect, Musk’s company might be able to get its sales figures back on track compared to other electric vehicles. But there are still plenty of affordable hybrids and gasoline-powered models that Americans can snap up instead.
The difficulty is that tariffs will raise prices across the board on car parts and might well make it harder for the average American to buy a new vehicle. Rather than splurge on a Tesla, lower-priced alternatives threaten to win sales.
How Much Can Tesla Stock Grow?
Though hiccups are many short-term, Tesla stands to rise by the end of 2026 if the CEO can focus more on the business. Some analysts predict deliveries of 1.92 million units in 2025, an increase of 7% from the previous year.
Stifel, for its part, predicts Tesla will make $17.3 billion in 2025 and $22.1 billion in 2026. So, those figures will be on a positive track compared to the $25.71 billion in 2024.
Is Tesla Stock Ripe for Picking?
11 out of 19 analysts have a buy rating with an average price of $349, which leaves decent upside for new buyers. At the high end of the range, analysts have pegged Tesla for a price target of $410.
How will Tesla stock play out in 2025? A host of lower-cost models, robotaxis, and offerings with AI and robotics stand to benefit it.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.
