Tesla (TSLA) Plunges 3.17% Amid China Sales Slump, Political Controversies

On June 5, 2025, Tesla's stock experienced a 3.17% drop in pre-market trading, reflecting ongoing challenges in key markets and political controversies.

Tesla's sales in China have been declining for eight consecutive months, with a 15% year-over-year decrease in May. This trend is attributed to intense domestic competition and a heated price war. The company's Shanghai factory, which produces the Model 3 and Model Y for both domestic and export markets, saw a 17.6% year-over-year decline in the first five months of 2025. In contrast, domestic rival BYD reported a 14.1% year-over-year increase in sales for the same period. Tesla's struggles in China are compounded by CEO Elon Musk's political stances and the company's aging and costly EV lineup, which have weighed on sales, particularly in Europe and the UK.

In Europe, Tesla faced significant challenges, with a 36.2% year-over-year decline in sales in Germany in May. Despite a 36.7% month-over-month increase, the overall market share for Tesla in Germany has shrunk. The competition from Chinese brands like BYD, which saw an 824% increase in sales in Germany, and European brands like Volkswagen, Mercedes-Benz, and BMW, has intensified. These competitors offer more affordable and locally tailored electric vehicles, posing a significant threat to Tesla's market position. Additionally, Musk's controversial statements have led to consumer backlash, with some potential buyers opting for competitors due to concerns over Tesla's brand values and political alignments.

Tesla's efforts to boost sales through referral programs and discounts have shown mixed results. In China, the company has reintroduced referral rewards to incentivize purchases, but the long-term effectiveness of these measures remains uncertain. The political controversies surrounding Musk and the company's reliance on high-end, expensive models have created a challenging environment for Tesla to navigate. As the electric vehicle market becomes increasingly competitive, Tesla will need to adapt its strategies to maintain its leadership position.