Image: Tesla's Gigafactory at New York, U.S.
Tesla stock has dropped by over 55% since December, a significant collapse that has shocked shareholders and analysts alike. In mid-December 2024, Tesla stocks were all-time high of around $480; by early March 2025, it had shrunk to roughly $220. This fallout erased over $800 billion in market value, the steepest drop Tesla has seen in years.
On 10th March, Elon Musk loses $29 billion in a single day. According to the Bloomberg Billionaires Index, Musk's net worth on Sunday was $330 billion which fell to $301 billion on Monday evening’s closure of stock market.
This drop was the result of the decline in Tesla’s stock price. Tesla's stock fell 15% on Monday, marking its biggest single-day decline since September 2020. The tech-heavy Nasdaq 100 was down 4% overall while the S&P 500 was down 3%. Along with Elon, Tesla lost $127 billion on Monday making it the worst day since 2020 for both of them.
1. Stock market bloodbath on Trump’s decision of tariffs
The stock market as a whole dropped significantly on Trump’s decision to increase tariffs. The U.S. tech companies are plunging because of tariffs and Trump recession fears. U.S. tech companies, including Tesla, lost a combined $750 billion on Monday. The Nasdaq 100 index sank 3.8%.
Trump has already increased tariffs on Canadian aluminum and steel imports to 50%. Canada and Mexico are key markets for automotive suppliers, and increased tariffs, with the potential for a trade war, will likely affect production and lead to higher prices. This was the decision that initiated the stock market bloodbath, according to many analysts.
2. Increase in EV competition for Tesla and Decline in Sales
China EV stocks, on the other hand, had a relatively good day, even after the bloodbath in U.S. markets. EV giant BYD notched a 1.3% rise in Hong Kong, bringing its year-to-date gains to just over 35%. Xpeng’s Hong Kong shares jumped an impressive 8.7%, one day after the chairman said the Tesla competitor will start mass production of its flying car by 2026.
Elon Musk’s EV maker faces fierce competition in China, compared with its home market of the U.S. Cars from BYD are more affordable, while startups like Nio and Xpeng offer advanced features and software, like driving assistance.
Tesla reported a steep 49% year-on-year decline in China sales in February, though the drop was exaggerated by the U.S. carmaker pausing production ahead of a revamped Model Y release. BYD’s February sales, on the other hand, rose by 161% (though that figure may have been artificially inflated by 2024’s late Chinese New Year).
BYD was just around 25,000 cars shy of overtaking Tesla to be the world’s largest seller of battery EVs in 2024.
In Europe, Tesla’s sales have dropped significantly by about 50% this year—down 71% in Germany, 45% in Norway, and 44% in both France and Spain.
Outside Europe, Australia reported a 66% drop in Tesla registrations in the month, while the brand's worldwide sales of cars produced in China were down 49% due to intense pressure from Chinese rivals.
3. Competition from Chinese Tech sector
Chinese stocks, particularly in the tech sector, have rallied this year thanks to DeepSeek and its powerful, efficient, and cheap models. The Hang Seng Tech Index, which tracks tech companies listed in the Chinese city of Hong Kong, is up over 35% in 2025.
On Monday, Citi upgraded Chinese equities to overweight, citing the emergence of DeepSeek and Beijing’s support for the tech sector.
4. Musk’s Focus in Washington on the Department of Justice
Many investors are anxious that Elon is spending too much time in Department of Government Efficiency (DOGE) and not focusing on Tesla and X. His role has been controversial in an initiative to reduce federal agencies. His aggressive budget cuts and mass layoffs have triggered public backlash, including nationwide protests at Tesla dealerships. There are multiple tweets from investors and analysts in this regard and the #TheTeslaTakedown campaign is also adding up to the heat.
Musk has been working closely with President Donald Trump and the DOGE office as it seeks to make cuts to eliminate waste and fraud in the federal government, including by cutting spending and the federal workforce.
Musk said in an interview with Fox Business that aired Monday that it hadn't been easy to manoeuvre leading his companies, including Tesla and SpaceX, while also working on government efficiency efforts.
5. X outrage and Elon’s controversial statements.
X, formerly known as Twitter, had very rough Monday, users were reporting multiple outages throughout the day – and Elon Musk later claiming they were down to a "massive cyberattack".
The first spike in reported problems on Downdetector happened at 10am ET on Monday March 10, with X users in both the US and UK unable to get their usual fix of memes and outrage in the app or website.
During an interview with Fox Business, Musk elaborated further, stating that the attack appeared to originate from IP addresses linkeda to the Ukraine region. Furthermore, he added, “But there was a massive cyber-attack to try and bring down the X system with [Internet Protocol] addresses originating in the Ukraine area.”