Tesla's intraday plunge exceeded 14%, with its stock price halved from its peak! A significant drop in global sales has triggered a reevaluation on Wall Street

On Monday, Tesla's stock price plummeted more than 14%, marking its worst intraday performance since January 2023. Tesla's price has more than halved from its all-time high set in December last year. Meanwhile, amid concerns over a U.S. economic recession, the Nasdaq index fell more than 4.4% during the day.

Tesla's Disappointing Sales

Tesla's sales in Europe halved in January, and in February, sales in Germany plummeted by 76%. In February, Tesla's sales in China were also dismal, with its market share dropping to 11th place.

The latest data from the China Passenger Car Association released on Monday shows that Tesla's sales in China have declined year-on-year for five consecutive months, with February deliveries down 49% year-on-year, totaling only 30,688 vehicles, the lowest level since July 2022. At that time, Tesla's deliveries were only 28,217 vehicles, during the peak impact of the COVID-19 pandemic.

Although Tesla's Gigafactory in the suburbs of Shanghai has recently upgraded some production lines to improve efficiency and reintroduce the popular Model Y, the decline in production has still affected delivery volumes in the short term, and it may take some time to return to peak levels. However, even considering these factors, Tesla's overall business in China has shown a downward trend.

While the decline in Tesla's market share is not an isolated case, as several automakers are also facing a decrease in market share, BYD has experienced growth against the trend. Since stopping the production of fuel vehicles in March 2022, BYD's market share has approached 15%. In February, BYD's sales reached 318,000 vehicles, a year-on-year increase of 161%, with both pure electric and hybrid vehicle sales hitting new highs. The overseas market also performed well, with exports reaching 67,025 vehicles that month, setting a new record.

Does Musk's Political Stance Affect Consumer Decisions?

Several Wall Street analysts have warned that Musk's political statements could impact Tesla's brand image and market demand, which is a factor that cannot be ignored. Musk has recently been increasingly involved in politics, causing dissatisfaction in Europe and the U.S., even leading to owners in these markets selling off their rapidly depreciating Teslas.

Baird analyst Ben Kallo stated on CNBC's "Squawk on the Street" on Monday that recent acts of vandalism against Tesla stores and vehicles could weaken market demand:

"When people's Tesla cars face the risk of being scratched or even set on fire, even consumers who support Musk or are neutral towards him may think twice before purchasing a car."

According to NBC, vandalism incidents against Tesla have occurred in multiple regions across the U.S., including a Tesla dealership in Colorado that has been set on fire multiple times.

Musk's close relationship with Trump and his gradual alignment with right-wing political figures starkly contrasts with Tesla's early brand image. At the rise of Tesla, the company dominated the electric vehicle market, associating its brand more with environmentalism and liberalismHowever, Elon Musk has now become an advisor to Trump and is leading the "Government Efficiency Department," focusing on cutting government positions, reducing spending, and streamlining regulatory agencies.

Several Wall Street institutions lower Tesla sales expectations

Analysts surveyed by Bloomberg generally expect Tesla's sales to grow by 10% this year, while Tesla executives had previously anticipated a return to growth by 2025.

However, although Baird analyst Ben Kallo maintains an "outperform" rating on Tesla stock, he released a short-term bearish report on Tesla last week, lowering the delivery expectations for Tesla.

On Monday, Ben Kallo further pointed out that the market has overly high expectations for Tesla's first-quarter earnings, mainly due to the company transitioning to the new Model Y, which has affected short-term deliveries; political controversies may also put additional pressure on demand.

Ben Kallo stated, "It is still too early to draw conclusions, but I believe that concerns about declining demand for Tesla will persist due to the impact of capacity ramp-up on deliveries."

Kallo added that the next few months will be a critical window period, during which it will be possible to truly assess whether Musk's political leanings have attracted more buyers or lost more customers.

Kallo stated, "The likelihood of declining demand is high, especially in the European market. But the bigger issue right now is that the market's expectations for Tesla are too high, and capacity issues mean those expectations need to be lowered."

Kallo is not the only Wall Street analyst skeptical about Tesla. UBS and Redburn Atlantic also reiterated their "sell" rating on Tesla stock on Monday.

UBS analyst Joseph Spak lowered Tesla's first-quarter and full-year delivery expectations, forecasting only 367,000 deliveries this quarter, a 16% reduction from previous forecasts, and expects full-year sales to decline by about 5% year-on-year.

Spak noted in the report that although the updated version of the Model Y may drive some demand, overall order volume remains sluggish. He mentioned that Tesla's official website in China shows that customers only need to wait two to four weeks for delivery of the new SUV, which may indicate relatively weak order volume