Tesla is no longer a trillion-dollar company: what investors need to know

Tesla’s post-election stock surge has nearly vanished as shares of the electric vehicle giant tumbled over 8% on Tuesday, pushing its market capitalization below $1 trillion for the first time since early November.

The decline, fueled by investor concerns over weakening demand, political risks, and competition from Chinese EV makers, has erased most of the gains Tesla had enjoyed following President Donald Trump’s election victory.

Adding to the sell-off, a new report from China has sparked fresh anxiety among Tesla shareholders.

The report suggests Tesla’s long-anticipated upgrade to its semi-autonomous driving software has disappointed users in China, with many claiming the new “Navigate on City Streets” feature falls short of CEO Elon Musk’s ambitious self-driving promises.

Meanwhile, domestic competitors like BYD and Xiaomi are offering advanced driver-assistance technology at significantly lower costs—or even for free—putting further pressure on Tesla’s market position.

Investor sentiment and Musk’s increasing involvement in Washington

As head of President Trump’s newly formed Department of Government Efficiency (DOGE), Musk has gained access to critical government systems, sparking controversy over his influence on policies that could benefit his businesses, including Tesla.

His political activism and alignment with Trump have also led to growing opposition, with organized protests emerging at Tesla stores and service centers in multiple countries.

Tesla’s recent financial performance has done little to reassure investors.

The company’s fourth-quarter earnings report showed a sharp 8% decline in automotive revenue compared to the previous year, with operating income plunging 23%.

Tesla attributed the decline to falling average selling prices across its aging vehicle lineup, including the Model 3, Model Y, Model S, and Model X.

In California, Tesla’s largest US market, sales fell 11.6% in the last quarter of 2024, according to the California New Car Dealers Association.

The stock has now dropped 25% since the start of 2025, underperforming the Nasdaq Composite, which is down just 1.5% year-to-date.

Tesla shares are also trading more than 35% below their all-time high from December, wiping out over $100 billion from Musk’s net worth.

Despite the losses, Musk remains the world’s richest person with an estimated fortune of around $380 billion.

Tesla’s stock had surged 15% immediately after Trump’s election victory, in part due to Musk’s high-profile backing of the former president.

Musk reportedly contributed $290 million to Republican candidates and causes in 2024, with the majority directed toward securing Trump’s return to the White House.

However, as investor optimism fades and competitive pressures mount, Tesla now faces a challenging road ahead in both the US and international markets.

The latest setback in China could be particularly costly.

While Tesla continues to push its semi-autonomous driving capabilities, Chinese EV makers are rapidly gaining ground by offering competitive technology at more affordable prices.

With BYD already outselling Tesla globally in total EV sales and Xiaomi’s new SU7 model attracting significant interest, Tesla’s position in the world’s largest EV market is under growing threat.

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