Why is Tesla stock dropping as Elon Musk’s net worth goes down by $15billion
Elon Musk can't seem to stay out of the news lately - after bringing his toddler to the Oval Office, performing a perceived 'Nazi Salute' at Trump's inauguration, and featuring in the US President's shocking AI-generated video of Gaza.
But as the world's richest man makes yet more headlines, shares in his electric car company, Tesla, have begun to plummet. Tesla’s share price fell more than 8 per cent as of 6.20pm UK time on Tuesday, February 25.
Meanwhile, reports revealed that European sales for the company fell by about 45 per cent over the last month. This drop in sales has occurred despite the fact that rival electric vehicle companies have seen an increase in demand.
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The plummet has caused Elon Musk’s net worth to drop dramatically by almost $15billion, according to Forbes. And Tesla’s stock price has fallen by a colossal 25 per cent since December 31.
CNN also reports that the businessman has lost $52billion of his total net worth so far this year. But as the richest man on Earth gets (slightly) less rich, what is the explanation for this huge drop in shares and sales of Tesla?
Here's everything you need to know about the electric car brand's losses.
Why have Tesla shares dropped?
The significant decrease in Tesla’s stock price comes after Elon Musk's recent involvement in the US Government. Bloomberg reported that the company has been struggling with European sales over the last month, as Musk has become more involved in politics as a key adviser to President Donald Trump.
He has also inserted himself into European and UK politics, where he has openly backed right-wing parties like Reform UK. The Bloomberg report revealed that January 2025 saw the lowest monthly total of new Tesla cars registered in Germany since July 2021.
This is thought to be connected to Musk's support of the far-right Alternative for Germany party. France has also seen its smallest Tesla sales since August 2022.
An analyst note from Wedbush, which is led by tech expert Daniel Ives, revealed on Monday that Musk's political involvement and relationship with Trump has contributed to Tesla's losses.
The note said: “With this influence in the Trump Administration and the broadening DOGE [Department of Government Efficiency] initiative in the 202 area, there has been a visible perceived downside impact weighing on Tesla shares. The worry of the Street is that Musk dedicating so much time (even more than we expected) to DOGE takes away from his time at Tesla in such a crucial moment and year for the company.”
The note also explained that Musk’s actions may “alienate some consumers to move away from the Tesla brand.” However, they described this decrease in popularity as “containable brand issues” for Tesla that are “not a major cause for concern.”
Under Trump and Musk, the US Government has moved to fire thousands of federal probationary employees, implementing some tactics Musk used when he took over Twitter, now called X.
Musk emailed screeds of federal employees, requiring them to explain what they had achieved over the last week or face termination. In addition to the widespread criticism of their political actions, Musk and Trump are facing a number of lawsuits and legal challenges since the President took office in late January.
As Musk's political behaviours continue to alarm and baffle the world, we may see his net worth plummet yet further in the coming weeks and months.
