For fans of Elon Musk, the enigmatic CEO of Tesla (NASDAQ: TSLA), the last few weeks must have been a test of their patience.
Tesla’s share price has tumbled by 34% year-to-date to around US$250 although the stock is still up 44% in the past year.
Still, the electric vehicle (EV) maker’s stock has lost nearly half its value since hitting its all-time high close of US$479.86 back in December 2024.
What’s causing the negativity? And can investors see a rebound in Tesla’s share price anytime soon?
A downbeat set of earnings
Tesla delivered a downbeat set of earnings for 2024 as stiff competition and increased costs ate into the EV maker’s bottom line.
Total revenue inched up 1% year on year to US$97.7 billion but masked a 6% year-on-year decline in automotive revenue to US$77.1 billion.
With operating expenses surging 18% year on year, Tesla’s operating profit tumbled 20% year on year to US$7.1 billion.
Net profit plunged 53% year on year to US$7.1 billion, a sharp decrease from 2023’s US$15 billion.
There were several bright spots, though.
The EV maker still generated a positive free cash flow of US$3.6 billion for 2024, albeit lower than 2023’s US$4.4 billion.
Its total cash equivalents and investments also continued to rise, climbing 26% year on year to US$36.6 billion.
Tesla also reported a record delivery of 495,000 vehicles for the fourth quarter and deployed a record 11 GWh of energy storage products.
Trump’s tariff tantrum
Investors may be feeling despondent because of President Trump’s multiple tariff announcements.
He imposed sweeping 25% tariffs on all steel and aluminium imports and has also imposed 25% tariffs on both Canada and Mexico.
Mexico and Canada are key markets for automotive suppliers, and these increased tariffs are likely to spark a bruising trade war which will lead to higher prices for Tesla’s EVs.
Higher prices will make Tesla’s vehicles even less competitive compared with Chinese counterparts which are muscling into the market (see below).
Brand erosion
Aside from worries over higher production costs and an increase in vehicle selling prices investors also have to contend with Tesla’s falling brand value.
Research and consulting firm Brand Finance carried out a comprehensive consumer survey and concluded that the value of Tesla’s brand fell 26% year on year to around US$43 billion in 2024.
This fall was Tesla’s second straight year on brand value decline and factors include its ageing line-up of vehicles along with Elon Musk’s antics.
Tesla’s scores declined across the board for key measures such as “reputation” and “recommendation” in Asia, Europe, and the US, underscoring the poorer consumer perception of the brand.
Musk’s political agenda
Musk himself is busy helping the US government, being tasked as the head of the Department of Government Efficiency (DOGE).
DOGE is a new advisory body created by Donald Trump that has been tasked with cutting US government jobs and curtail unnecessary spending.
It’s not surprising that DOGE is sucking up a significant portion time of Musk’s time, as evidenced by an interview with Fox Business recently where he admitted that he has “great difficulty” running his various businesses while heading DOGE.
Investors should no doubt be worried as to whether Musk can run Tesla effectively with his time being divided among so many pursuits.
Stiff competition from China
To add to Tesla’s litany of troubles, competition is also heating up.
The EV market has seen many Chinese players muscling in, with BYD (SGX: HYDD) taking the global crown.
BYD has overtaken Tesla as the world’s largest electric car manufacturer by market share.
For the fourth quarter of 2024, BYD’s market share came in at 16%, surpassing Tesla’s 14% share.
Meanwhile, Geely Auto (HKSE: 0175) is also seeing its market share increase.
Over in India, Tata Motors grabbed 60% of the Indian market with its affordably-priced electric cars.
Tesla’s sales across the US, China, and several European countries fell year on year for February 2025.
Sales in Germany plunged 76% year on year while China’s sales fell 49% year on year.
Chinese rivals are rolling out new models consistently and making updates to their products, making Tesla’s line-up seem stale in comparison.
Get Smart: Multiple headwinds
Tesla is facing multiple headwinds as it tries to compete against its competitors.
Tariffs and the erosion of its brand value are worrying for investors and such problems may not get resolved anytime soon.
Musk needs to demonstrate that he can devote more time to solving Tesla’s troubles for investor confidence to return.
Otherwise, the stock looks set to continue to languish as there are no positive catalysts on the horizon.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
