Tesla’s Stock Volatility and Trump’s Response

Tesla’s stock experienced a significant 15% drop, triggering a response from US President Donald Trump. While Trump attributed the decline to a “radical left” boycott against Elon Musk, financial analysts pointed to concerns over Tesla’s production targets, declining sales, and the broader economic impact of Trump’s own tariff policies.  

The market downturn coincided with a general sell-off of US tech stocks, including Nvidia, Meta, Amazon, and Alphabet, driven by investor fears of a potential recession and the effects of Trump’s tariffs. These tariffs, aimed at imported goods, raise concerns about increased prices and slowed economic growth.  

Tesla’s stock saw a partial recovery the following day, rising 3.6%. However, the initial drop followed a warning from a UBS analyst about potentially lower-than-expected Tesla deliveries.

Trump, using his Truth Social platform, urged “Republicans, Conservatives, and all great Americans” to support Musk, who is leading the unofficial “Department of Government Efficiency” (Doge) focused on federal spending cuts. Trump announced he would purchase a new Tesla to show his support, praising Musk’s work and blaming the stock decline on a “radical left” boycott.  

This support contrasts with Trump’s past policies, which have aimed to limit electric vehicle adoption, including revoking a Biden-era electric vehicle sales target and halting charging station funding. His tariffs also pose a potential financial burden on Tesla, as the company sources parts from Canada and Mexico.  

Analysts, including Linsay James of Quilter Investors, acknowledge that Musk’s political stances may have a “brand impact,” but emphasize that the stock drop is primarily driven by “hard numbers.” Tesla’s sales have declined significantly in Europe, China, and Australia, with European sales down 45% in January alone. Additionally, concerns about Tesla’s valuation, increased competition from Chinese EV companies, and a general economic slowdown are contributing factors.  
Musk’s involvement with Doge, alongside his existing business ventures like SpaceX, has also raised concerns about his focus. SpaceX has recently experienced launch failures, adding to investor anxieties.