The “bromance” between United States President Donald Trump and tech billionaire Elon Musk was on full display on Tuesday when the White House South Lawn was transformed into a miniature Tesla showroom.
Musk lined up Tesla cars to showcase the electric car producer’s latest innovations while Trump promised to brand anyone vandalising a Tesla car a “domestic terrorist” following reports of a spate of vandalism and arson attacks on Tesla cars across the country.
Trump, known for his strong stance on domestic manufacturing and business leadership, has given Musk a prominent role in his new administration as leader of the new Department of Government Efficiency (DOGE), which claims to have uncovered “billions and billions of dollars in waste, fraud and abuse” in the US federal government – claims for which Musk and Trump have yet to show significant evidence.
Meanwhile, Tesla shares, which are listed on the NASDAQ, are floundering. On Monday this week, they plummeted by 15 percent to end the day at $215 – the worst day for the stock since 2020 and its lowest level since Trump won the presidential election in November. The shares bounced back a little after Tuesday’s presidential plug for Tesla cars to $231.83 in the morning, before levelling out at about $235 by the end of the day. On Friday, the shares were were due to open at around $240.
Tesla stock has been in freefall since its heady highs of more than $435 in mid-December, 2024. So why is the car manufacturer doing so poorly when its owner appears to be flying high at the White House?
Why is Tesla’s share price falling?
Despite performing well following the November presidential election in the US, Tesla’s stock was volatile during 2024 overall and has declined sharply since the start of this year. Robert Scott, a specialist in international economics and trade policy, said a fall in the share price was inevitable due to its “extreme overvaluation”.
“Tesla’s stock was highly overvalued, with one of the highest price-to-earnings ratios ever recorded,” Scott told Al Jazeera. This means the price of the stock was very high compared with the profits the company was generating. “This indicates that the stock price was inflated relative to market fundamentals.”
William Lee, chief economist at the Milken Institute, said the fall in the share price has come about as a result of delays to the launch of new Tesla products.
“The new refresh for the Tesla Model Y continues to be delayed, and more importantly, no new models have been introduced,” Lee said.
What has happened to sales of Tesla vehicles?
There has been a marked decrease in sales in Europe and elsewhere. According to data from Business Insider, the business trade news outlet, in February, sales were 76 percent lower in Germany than they were the previous year even though overall sales of electric vehicles were 31 percent higher. Sales in Germany also fell in January following Musk’s endorsement of the far-right AfD party. In Norway, Denmark and Sweden, sales fell 40 percent year on year in February and dropped by 26 percent in France. The company has also been suffering from organised boycott campaigns in the United Kingdom and Portugal.
