Tesla stock crashes nearly 9%, market value dips below $1 trillion. Here's why

Tesla shares tumbled in overnight trading session, dropping below $1 trillion for the first time since November 2024. The electric vehicle (EV) giant’s stock fell 8.39%, closing at $302.80.

With this, the company’s market capitalisation now stands at $948 billion, its lowest since November.

WHAT TRIGGERED TESLA’S STOCK DECLINE?

The decline followed data from the European Automobile Manufacturers Association, which reported Tesla’s sales in Europe fell 45% in January.

In contrast, overall EV sales in the region rose 37%. This sharp drop has added to concerns about Tesla’s weakening global demand, especially after a dip in deliveries last year.

Investors are pressuring CEO Elon Musk to introduce lower-priced models and advance autonomous vehicle plans.

Some investors are also uneasy about Musk’s growing political involvement.

“He’s a very hands-on operator, and if you’re spending that much time in an office in the White House, how much time are you spending running all of your other companies, including the one that’s publicly traded?” Art Hogan, chief market strategist at B. Riley Wealth, told news agency Reuters.

Additionally, concerns over excessive investment in artificial intelligence (AI) have weighed on Tesla, as well as on Microsoft and Meta, ahead of Nvidia’s earnings report.

Tesla’s stock currently trades at 112 times expected earnings, well above its five-year average of 93, as per LSEG data. In comparison, Ford trades at eight times earnings and GM at seven.

Despite Tuesday’s drop, Tesla shares remain up over 51% over the past 12 months but have declined 20% year-to-date.