Tesla and Elon Musk Take Bold Action as U.S.-China Trade War Rages On

This past year has been quite challenging for Tesla investors.

After hitting its peak in December due to the excitement following President Donald Trump’s victory in the 2024 election and his appointment of Tesla CEO Elon Musk as the head of the Department of Government Efficiency—a role focused on eliminating waste, fraud, and corruption within the administration—Tesla stock has seen changes. ( TSLA ) shares have plummeted.

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The stock has dropped by 42% since reaching its peak over the past five months, with a significant portion of this decrease due to the political fallout following Musk's visit to Washington.

Tesla's entry into Europe marked the initial collapse. During the first couple of months this year, sales in the area plunged by 49%, coinciding with Musk’s engagement with far-right wing politics in a region predominantly (though not entirely) inclined towards the leftist perspective.

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Even though the company sold more vehicles, its market share in the area decreased to 1.1%.

Nevertheless, European sales constitute a minor portion of Tesla's revenue. The more alarming information from the quarterly report was revealed when the company disclosed a 13% decrease in total first-quarter sales compared to the previous year, marking the most significant downturn since the company’s inception.

However, it’s not only Musk who is challenging Tesla. The rivalry in the electric vehicle sector has certainly heated up, and although Tesla remains the clear frontrunner in the U.S. market with over 48% share as of Q3 2024, this figure was at 80% back in 2019.

Tesla encounters yet another overseas crisis

Tesla enjoys a considerably more robust market position in China compared to Europe.

The firm holds a 11.47% stake in the battery electric vehicle sector and represents 7.48% of China’s new energy vehicle market.

This represents nearly the strongest position an automobile manufacturer from America could achieve within the Chinese market.

In 2024, sales in China surged by 8.8%, reaching a new high with 657,000 vehicles delivered. However, the company experienced a slight decline as their market share for purely electric battery cars dropped to 10.4% from 11.7%.

This can be attributed to the strong presence of local heavyweight BYD, holding a 32% share of the new energy vehicle market within the nation.

Currently, it's getting more difficult for Tesla to keep up with its diminishing market presence.

Reuters reported on Friday that Tesla has halted accepting new orders for the Model S and Model X in China, as confirmed by checking the firm’s website.

Despite having a massive Gigafactory, both models are manufactured in the U.S. and then brought into China.

Connected: Tesla Cybertruck proprietors might not be pleased with Tesla’s most recent decision.

This development occurs amidst intensifying trade tensions between the U.S. and China, adding another layer of complexity to Musk’s ties with the nation. Given his role as an informal advisor to the Trump administration, Musk finds himself at the center of this dispute.

The tariff war causes chaos for Tesla.

This week, Trump implemented an unprecedented 125% tariff on all Chinese goods, which he later raised to 145% after stating that China’s response to his threats was inappropriate.

The Shanghai Gigafactory produces Model 3 and Model Y cars for both China and Europe.

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GM shares unexpected business update
Ford shares unexpected developments as Tesla faces upheaval
Apple devises smart method to thwart car thefts.

Reuters reported that China imported 1,553 Model X units and 311 Model S units in 2024, indicating a relatively minor impact from this development. Nonetheless, it serves as an indication that Musk’s political aspirations carry certain risks which could have repercussions for Tesla shareholders.

In early trade on Friday, Tesla's stock dropped by 2.77%.

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