Tesla shares plunged 15% on Monday, marking their steepest single-day decline since September 2020, as the electric vehicle maker continues to struggle with market volatility, declining sales, and concerns over CEO Elon Musk's close ties to the Trump administration. The stock's extended losses have now erased more than $800 billion in market capitalization since peaking at $479.86 on December 17.
The selloff came as the broader U.S. stock market suffered a sharp downturn, with the Nasdaq falling nearly 4%, its worst day since 2022, while the S&P 500 dropped 2.7% and the Dow Jones Industrial Average declined 2.1%. The uncertainty surrounding President Donald Trump's tariff policies, particularly those affecting key auto supply markets in Canada and Mexico, has added pressure on Tesla and other automakers.
The economic implications of the administration's evolving trade stance have fueled concerns that increased tariffs could raise production costs and disrupt supply chains. Investors are also wary of the potential impact of Tesla's declining brand perception amid Musk's deepening political involvement.
Since joining the Trump administration as head of the Department of Government Efficiency, Musk has become a focal point in debates over federal workforce reductions, budget cuts, and regulatory rollbacks. Meanwhile, Tesla has faced backlash from activists and former supporters, with instances of vandalism and arson reported at several Tesla facilities across the U.S., including a service center in Loveland, Colorado, which was targeted multiple times, most recently on March 7, according to police.
Beyond brand-related concerns, Tesla's sales figures are also faltering. A report from Bank of America noted that Tesla's new vehicle sales in Europe declined by about 50% in January compared to the previous year. While some of the decline was attributed to customers waiting for an updated Model Y, the report also pointed to reputational challenges as a factor in Tesla's slowing growth.
Despite Tesla's struggles, the Model Y remained the best-selling battery electric vehicle globally in January, followed by Geely's Geome, which overtook the Tesla Model 3. However, while global electric vehicle sales increased 21% year-over-year, Tesla's numbers did not reflect that growth.
The broader economic landscape is also showing signs of weakening. The Federal Reserve Bank of Atlanta's real-time indicators suggest that the U.S. economy may already be shrinking. Meanwhile, Goldman Sachs revised its growth forecast downward from 2.2% to 1.7% for the end of 2025, citing the uncertainty surrounding tariffs.
In an interview with Fox News, President Trump addressed concerns about a possible recession but did not rule it out. "I hate to predict things like that," Trump said. "There is a period of transition because what we're doing is very big. We're bringing wealth back to America. That's a big thing. And it takes a little time."
