What Happened?
Shares of electric vehicle pioneer Tesla (NASDAQ: TSLA) fell 3.6% in the afternoon session after Bloomberg reported that the company's sales (January 2025) fell almost 60% in Germany, compounding its woes in Europe, days after reports revealed similar weaknesses in Sweden and Norway. Data from the German Federal Motor Transport Authority revealed Tesla registered only 1,277 new cars in January 2025, hitting their lowest level since mid-2021, signaling weakening demand. Furthermore, the data indicated a similar decline in France and the UK.
On top of that, JP Morgan flagged Tesla as one of the stocks "most at risk" from trade tensions and tariff disputes. Analyst Lakos-Bujas added, "...we expect sudden bouts of volatility followed by recovery ... with high stock dispersion to be an ongoing feature for markets in 2025."
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What The Market Is Telling Us
Tesla’s shares are extremely volatile and have had 111 moves greater than 2.5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 7.1% as the Trump administration's new tariffs (25% on Canadian goods and 10% on Chinese products) shook markets. While similar tariffs were set for Mexico, they have been delayed. But it doesn't help that Canada has already hit back with its levies on U.S. imports.
Also, Canada's Former Finance Minister Chrystia Freeland, who is campaigning to replace prime minister Justin Trudeau), called for a 100% tariff on Tesla.
President Trump noted in a social media post that Americans might feel the sting: "WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!)." The tariffs were imposed as part of measures to improve the U.S.'s trade gap with the rest of the world and also to tighten border security. The auto industry stands in the crosshairs. Notably, Tesla builds some of its cars with parts from Canada and Mexico. Tariffs could drive up costs, making cars more expensive from the factory to the dealership.
Separately, there are reports Tesla is losing ground in Sweden and Norway. According to Reuters, registration numbers for Teslas in Sweden fell 44% in January 2025, while in Norway, they dropped 38% compared to the previous year.
Tesla is down 0.2% since the beginning of the year, and at $378.38 per share, it is trading 21.1% below its 52-week high of $479.86 from December 2024. Investors who bought $1,000 worth of Tesla’s shares 5 years ago would now be looking at an investment worth $7,726.
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