Tesla's Stock Plummets Amid Sales Slump and Musk Controversy: Is This a Buying Opportunity?

Tesla’s stock price tumbled 5% on May 6, 2025, and another 5% the following day, as investors reacted to a perfect storm of weakening sales, political controversies, and intensifying competition. The decline marks the latest chapter in a year-long slide that has erased nearly half of Tesla’s value since late 2024. But with shares now trading at levels not seen since early 2023, the question looms: Is this a buying opportunity or a warning sign of deeper structural issues?

The Sales Collapse: A Global Setback

Tesla’s struggles are most evident in its core markets. In Europe, sales plunged 36% in Spain and 76% in Germany year-over-year, driven by backlash against CEO Elon Musk’s political affiliations. In Germany, Musk’s vocal support for far-right nationalist groups alienated consumers, even as EV adoption surged 28% across the continent. Meanwhile, China’s BYD—a once-underdog competitor—now outpaces Tesla with deliveries up 39% to 416,000 units in Q1 2025, compared to Tesla’s 337,000, a 13% decline.

The data underscores a widening gap. BYD’s five-minute ultra-fast charging technology, offering 250 miles of range, has further eroded Tesla’s infrastructure advantage. Even in the U.S., Tesla’s brand reputation is fraying: 58% of used Cybertrucks lost resale value year-over-year, and searches for Teslas fell 7%, while non-Tesla EV inquiries rose 12%.

Musk’s Political Entanglements: A Brand-Wrecking Force

Musk’s role as head of the Department of Government Efficiency (DOGE) under the Trump administration has drawn fire. A CNN poll shows 53% of Americans view him negatively, with his political activism alienating liberal markets. Anti-Tesla campaigns like the “Tesla Takedown” movement have gained traction, with protests and vandalism targeting facilities. In Europe, Musk’s support for far-right groups directly correlated with a 49% sales drop on the continent.

Analysts at Jefferies noted Tesla’s valuation now hinges on Musk’s “long-term vision”—a vision increasingly overshadowed by his fragmented focus across X, Neuralink, and political ventures. “Investors are asking: Is Musk a CEO or a CEO turned statesman?” one analyst remarked.

Analysts Sound the Alarm

The downgrade wave has been relentless. RBC Capital Markets lowered its price target, citing Tesla’s widening competitive gap and “waning investor patience.” While Dan Ives of Wedbush remains cautiously bullish, even he acknowledges Tesla’s core customer base is eroding, with repeat buyers in “blue states” dropping from 72% to 65%.

The stock’s 44% decline from its December 2024 peak has left it trading at a forward P/E ratio of 135—a valuation many deem unsustainable without breakthroughs. Technical traders point to a “double bottom” near $220, but the May 6 drop has reignited bearish sentiment.

Operational Headwinds: Execution Over Innovation

Behind the scenes, Tesla’s operational challenges loom large. A Model Y redesign caused factory shutdowns, straining production. The delayed launch of its Robotaxi service (now pushed to 2026) and ongoing FSD software delays have fueled skepticism about its autonomous driving roadmap. Musk’s pledge to “reduce involvement in DOGE” has done little to quiet concerns about leadership stability.

Is This a Buying Opportunity?

For bulls, Tesla’s fundamentals remain compelling: it still holds a 15% global EV market share, and its technology—particularly in battery and software—remains cutting-edge. The Robotaxi and FSD could redefine the autonomous vehicle market. But the path to recovery hinges on Musk refocusing on Tesla, reversing brand damage, and out-executing BYD.

For now, the risks outweigh the rewards. A 13% sales slump, a 50,000-unit delivery shortfall, and a P/E ratio 10x higher than peers suggest the stock is pricing in a rosier future than the current reality. Until Tesla demonstrates sales recovery, resolves Musk’s political distractions, and delivers on autonomous tech, this is a high-risk bet.

Conclusion: Proceed with Caution

Tesla’s May 6 decline reflects a confluence of crises—sales, brand, and leadership—that have eroded investor confidence. While its long-term potential in EVs remains unmatched, the road to recovery is steep. With a 135 P/E ratio, a 44% year-to-date decline, and BYD’s rapid ascendance, this is not a “buy the dip” moment unless investors are prepared for prolonged volatility. For now, the verdict leans toward wait-and-see—until Tesla proves it can regain control of its narrative.