Tesla faced a dramatic downturn in 2025, with its market capitalization plummeting by $380 billion, marking the most significant loss among major global companies this year. The electric vehicle (EV) giant’s valuation stood at $917 billion as of June 6, representing a staggering 29.3% decline since January.
Political Tensions and Public Spat Fuel Market Rout
The sharpest blow came after a high-profile public fallout between Tesla CEO Elon Musk and U.S. President Donald Trump. The conflict, which began with Musk’s criticism of government policy and escalated into a heated exchange on social media, culminated in Trump threatening to revoke government contracts and subsidies for Musk’s companies. This triggered a 14% plunge in Tesla’s share price in a single day, erasing roughly $150–$152 billion in market value—the most significant one-day loss in the company’s history.
The rift was further intensified by the passage of Trump’s “Big Beautiful Bill,” which eliminated federal EV tax credits—a move Musk described as an “EV-killer.” Analysts estimate this could cost Tesla up to $1.2 billion annually, compounding the company’s existing challenges of declining demand and shrinking profits.
Investor Concerns Over Musk’s Political Ambitions
Investor unease has grown over Musk’s increased involvement in politics, including his brief tenure as head of the Department of Government Efficiency (DOGE), which some believe distracted him from Tesla’s core business. Critics argue that Musk has alienated key customer segments by aligning with political groups that are less likely to buy electric vehicles. “He’s alienated the wrong people,” said marketing professor Scott Galloway, noting that most Republicans are not EV buyers.
Sales Slump in Key Markets and Rising Competition
Tesla’s troubles are not limited to the U.S. In Europe, the company has seen sales plummet across major markets, with declines of 59% in France, 81% in Sweden, 74% in the Netherlands, 66% in Denmark, 50% in Switzerland, and 33% in Portugal. In Germany, Tesla’s sales dropped by more than a third in May, marking the fifth consecutive month of declines, even as overall EV sales in the country surged, primarily fueled by Chinese competitors like BYD, which saw sales skyrocket.
Tesla’s Global Standing at Risk
Once the world’s eighth most valuable company, Tesla has now slipped to tenth place and is at risk of falling out of the global top 10. The company’s profitability has also suffered, with profits down 71% by the end of April. Meanwhile, Musk’s fortune has reportedly dropped by nearly $9 billion in the wake of the feud.
While Tesla’s shares witnessed a slight rebound after reports of possible reconciliation efforts between Musk and the White House, the company faces ongoing uncertainty. The combination of political controversy, regulatory threats, and intensifying competition is expected to continue weighing heavily on Tesla’s market performance in the months ahead.
