Tesla Stock Plunges 5.2% Amid Competitive Pressure

On July 1, 2025, Tesla's stock dropped 5.2% in pre-market trading, reflecting a challenging environment for the electric vehicle giant.

Tesla is facing significant pressure from competitors, particularly Xiaomi, which has captured a substantial portion of Tesla's orders. This shift in market dynamics has led to a decline in Tesla's stock price, with night trading seeing a drop of over 7%.

In response to the competitive pressure, Tesla has announced product upgrades for its Model 3 and Model Y long-range versions. The upgrades include increased battery range and performance enhancements, along with various incentives such as zero-interest financing for five years, insurance subsidies, and charging benefits. These moves aim to attract customers and regain market share.

Despite these efforts, Tesla's market position in China is under threat. Xiaomi's YU7 model, which offers better value and advanced features, has outperformed Tesla's Model Y. This has led to a significant reduction in Tesla's market share in China, a critical region for the company.

Additionally, political tensions have added to Tesla's woes. Former U.S. President Donald Trump has called for an investigation into the subsidies received by Tesla, further complicating the company's regulatory environment. This political pressure has contributed to the recent decline in Tesla's stock price.