The share price of Tesla plummeted by 36% during the first quarter of 2025, marking its most challenging quarter since 2022 and the third-largest drop in its 15-year history as a public company.
The last comparable downturn occurred at the end of 2022, when the stock fell by 54%, a period that included CEO Elon Musk selling over $22 billion in Tesla shares to secure funds for his $44 billion purchase of Twitter, which was later renamed X.
Recently, Musk announced his artificial intelligence venture, xAI, had acquired X in a deal valuing the social media firm at $33 billion.
In the first quarter of this year, Tesla’s market capitalization diminished by more than $460 billion. This period largely coincided with Musk’s tenure in the second Trump administration where he spearheaded efforts to cut government expenses and regulations and oversaw the dismissal of thousands of federal employees as head of the Department of Government Efficiency (DOGE).
Musk has faced criticism over the veracity of claims about federal budget wastage, with many found to be misleading or inaccurate. In an interview with Fox News, he stated a plan to reduce federal spending by $1 trillion by May.
Shifts in his political role are part of the factors impacting Tesla’s stock, also contributing to protests, boycotts, and attacks on Tesla outlets globally. Adding to investor concerns are President Trump’s auto tariffs affecting critical suppliers, including Mexico and China, which triggered a broader tech stock selloff, leading to a 10% drop in the Nasdaq, the largest since 2022.
Tesla is confronting additional challenges, such as slumping vehicle sales and pressure to fulfill Musk’s ambitious robotaxi promises while competitors advance. Musk has announced plans to launch a driverless ride-hailing service in Austin, Texas, by June, though some analysts doubt the feasibility of meeting this timeline.
Historically, shareholders have endured similar volatilities before. In early 2024, Tesla shares fell by 29% due to waning auto sales and rising competition but managed a strong recovery, finishing the year up by 63%.
Following these developments, Musk expressed confidence in Tesla’s long-term prospects, suggesting the current stock dip might constitute a buying opportunity.
At the end of the trading session on Monday, Tesla shares dropped by 1.67% or $4.39 to $259.16 per share. The price extended losses by 1.18% to $256.10 in the after-trading session.
