Tesla’s Value Sinks Below $1 Trillion as European Sales Dip

Tesla’s stock took an 8% dive on Tuesday, dragging its market capitalization below the $1 trillion mark for the first time since November. 

The sharp decline followed data showing Tesla’s European sales collapsed by 45% in January, a stark contrast to the 37% surge in overall EV sales across the region. The slump underscores growing pressure on CEO Elon Musk to deliver on promises of cheaper models and an autonomous vehicle future as global deliveries falter.

The stock closed at $305, leaving Tesla with a market cap of $981 billion—still more than double the combined value of legacy automakers like General Motors, Ford, Volkswagen, Toyota, Hyundai, and BMW. 

But the concerns run deeper than just sales figures. Some investors worry Musk’s involvement in President Donald Trump’s government is a distraction, raising questions about how much focus he can maintain on Tesla. Musk’s leadership role across multiple ventures, including SpaceX, only fuels uncertainty.

AI investments have also become a sticking point. Tesla, alongside Microsoft and Meta, faces increased scrutiny over its AI spending ahead of Nvidia’s quarterly earnings report. 

What Does This Mean for Me?

Valuation concerns are piling up as Tesla currently trades at 112 times expected earnings, far exceeding its five-year average P/E of 93. By comparison, Ford and GM stocks trade at just 8x and 7x earnings, respectively.

Despite the headwinds, Tesla supporters remain optimistic. Hopes are pinned on the company’s upcoming budget-friendly EV and Musk’s promise to roll out a paid autonomous car service.