The Tesla (NASDAQ:TSLA) share price has slumped in recent months, outpacing peers amid a tech sell-off. The Nasdaq and S&P 500 have both tumbled, driven by concerns over rising interest rates, a stronger US dollar, and overvaluation of tech stocks. However, Tesla, once a market darling, has been particularly hard-hit, with its shares plummeting 15.4% on 10 March alone. It’s now down more than 50% from its highs.
Is Musk getting distracted by DOGE?
One of the key factors behind Tesla’s decline is Elon Musk’s increasing involvement in Washington. To start, Musk’s endorsement of Donald Trump and his role in the Department of Government Efficiency (DOGE) have raised concerns about his focus on Tesla. Investors are wondering how he can continue to run Tesla, along with SpaceX, The Boring Company, X, and others, while trying to reduce federal spending.
What’s more, Musk’s affiliation with the current divisive administration appears to be having a negative impact on brand image. A CNN poll revealed that approximately 53% of respondents had a negative view of Musk, compared to 35% who held a positive opinion. This decline in brand perception is further evidenced by protests at Tesla showrooms and a broader consumer shift away from the brand in politically divided regions.
However, I still love my Model Y.
BYD’s market-moving news
Adding to Tesla’s woes, Chinese electric vehicle (EV) giant BYD has unveiled a groundbreaking super-fast charging system. BYD’s new ‘Super E-Platform’ can charge vehicles in just five minutes, offering a range of 250 miles. That’s at least twice as fast as Tesla’s Superchargers.
This innovation, coupled with BYD’s plans to build 4,000 ultra-fast charging stations across China, has positioned the company as a formidable rival to Tesla. Remember, China is a huge market for Tesla too. BYD’s announcement sent its shares to an all-time high, while Tesla’s stock continued to slide, reflecting investor concerns about Tesla’s ability to maintain its competitive edge.
Analysts are losing their conviction
Analysts have also downgraded Tesla’s delivery forecasts, citing weak sales in key markets like China and Europe. UBS lowered its 2025 delivery estimate to 1.7m vehicles, further dampening investor sentiment. Despite Musk’s reassurances and optimism about Tesla’s long-term prospects, the company’s stock remains under pressure, with its market value now at $845bn. This is still higher than traditional automakers but increasingly questioned by investors.
Of course, Tesla doesn’t want to be seen as an automaker. It wants to be a valued as a tech company. Tesla expects to lead in autonomous driving and ride hailing, although it’s already lagging peers like Waymo. It’s also hoping to lead in robotics, but there’s very little tangible to go on.
Personally, I’d like to see Tesla succeed. Like Musk or not, the company has continually pushed the boundaries of modern technology. However, I can’t buy the stock. The valuation — 90 times forward earnings — is simply far too high. I also expect some further declines in sales.
This post was originally published on Motley Fool
