Tesla's share price experienced a significant decline of 15% on March 10, 2025, marking its worst trading day since September 2020. This downturn has been attributed to a combination of factors, including disappointing sales figures and concerns over CEO Elon Musk's increasing political involvement. Following a peak of $479.86 in December 2024, Tesla's stock has now plummeted over 50%, erasing more than $800 billion in market capitalization. The stock's decline reflects broader market trends, with the Nasdaq falling nearly 4% on the same day, indicating a general unease among investors regarding the economic outlook and specific company performance.

Analysts at UBS played a crucial role in the stock's tumble by revising their first-quarter delivery estimates for Tesla from 437,000 to 367,000 vehicles. This downward adjustment raised alarms about declining demand for key models like the Model 3 and Model Y, which are critical to Tesla's revenue stream. Reports indicated that delivery times for these models in major markets had shortened significantly, suggesting reduced consumer interest. Additionally, shipments in China fell by nearly 49% year-over-year in February, further compounding fears about the company's sales trajectory and overall market position.

Musk's political activities have also contributed to the negative sentiment surrounding Tesla's stock. His high-profile role as an advisor in the Trump administration has drawn scrutiny, particularly as it coincides with mass layoffs and budget cuts that have sparked public protests. Investors are concerned that Musk's political engagements may detract from his focus on Tesla's core business operations, especially as vehicle sales decline. The backlash against his political statements and actions has led to brand damage, particularly in international markets where consumer sentiment is increasingly influenced by corporate leadership behavior.

The valuation of Tesla remains a contentious topic among investors and analysts. Despite its recent struggles, Tesla still commands a market capitalization of approximately $845 billion, significantly higher than traditional automakers like Ford and General Motors combined. Much of this valuation hinges on future expectations related to autonomous vehicle technology and innovations that have yet to materialize. Analysts warn that the gap between Tesla’s current performance and optimistic projections for its future growth raises questions about whether the stock can sustain its inflated valuation amidst growing competition and economic uncertainty.