Josh Weiner
Tesla’s stock has experienced its fair share of volatility over the years, often responding to the unpredictable actions of its CEO, Elon Musk. While Musk’s supporters commend his role in advancing electric vehicle (EV) adoption, critics highlight missed deadlines and unfulfilled promises regarding autonomous driving technology.
Musk’s recent political moves—including significant financial support for former President Donald Trump’s reelection campaign and his leadership of the Department of Government Efficiency (DOGE), an executive branch initiative aimed at cost-cutting—have added to the controversy surrounding the company. These political positions have alienated some longtime Tesla enthusiasts, contributing to declining sales in key markets such as Europe, China, and progressive U.S. states like California.
Tesla shares had tumbled over 50% from their December highs to a mid-March low, driven by these concerns. However, investor sentiment has shifted positively, with Tesla stock surging over 11% on March 24 following major news out of China.
Tesla Looks to Innovation to Regain Market Share
Tesla’s early success stemmed from Musk’s decision to position EVs as high-performance luxury vehicles rather than merely environmentally friendly alternatives. This strategy helped Tesla establish itself as a premier brand, rivaling legacy automakers like Mercedes-Benz and Porsche. However, competition has since intensified, with nearly every major automaker investing billions into EV development. Some rivals now offer vehicles that match Tesla’s performance while surpassing it in build quality and design.
This increased competition has eroded Tesla’s dominance. In February, data from the China Passenger Car Association revealed a 49% year-over-year drop in Tesla’s wholesale sales, which include exports and retail deliveries. The company sold just 30,688 new energy vehicles (NEVs) in China that month—the lowest in over two years—while local competitor BYD delivered 318,233 vehicles.
Europe has presented similar challenges. Tesla’s sales in the region plummeted 45% in January, even as overall car sales rose by 37%. In Germany, Tesla sales declined by a staggering 76% in February, according to the Federal Motor Transport Authority, despite a 31% rise in EV registrations.
In the U.S., Tesla recorded its first annual sales decline in over a decade, with a 1% drop in 2024. The Cox/KBB quarterly EV sales report indicated that Tesla’s unit sales increased by just 2.3% in the fourth quarter, significantly trailing the 15% overall growth in EV sales. In contrast, Ford’s EV sales rose 16%, while General Motors saw triple-digit percentage increases across its Cadillac, GMC, and Chevrolet brands.
China’s Green Light for Full Self-Driving Sparks Optimism
Tesla provided a much-needed boost to investor confidence on March 24, announcing via its Weibo account that it plans to launch Full Self-Driving (FSD) technology in China once it secures regulatory approval for over-the-air software updates.
Initially, Tesla had scheduled an FSD trial between March 17 and April 16. However, a February policy change requiring additional regulatory clearance for software updates led to speculation that Tesla’s FSD plans might face delays. Confirmation that the rollout remains on track has fueled investor optimism, helping Tesla stock rally nearly 12% on the news.
In the U.S., Musk previously announced plans to introduce unsupervised FSD in Austin by June 2025, with additional cities to follow over time. The potential for FSD to launch in China soon presents a crucial opportunity for Tesla to reignite interest in its vehicles and counterbalance recent sales declines.
Policy Shifts Add to Tesla’s Momentum
Market sentiment also benefited from recent statements by former President Donald Trump regarding trade policy. Investor concerns about broad-ranging tariffs and their potential impact on the U.S. economy, including EV sales, have weighed on stocks throughout the year. However, reports that the White House may exclude certain countries from reciprocal tariffs set to take effect on April 2, and that Trump is considering avoiding sector-specific tariffs on autos, have helped ease fears of an industry-wide slowdown.
These developments have collectively driven Tesla’s stock higher, providing the company with an opportunity to stabilize amid heightened competition and shifting consumer sentiment. With the potential approval of FSD in China and evolving U.S. trade policies, Tesla’s path forward appears more promising—at least for now.
