Tesla Stock Plunges 36% in First Quarter of 2025, Marking Worst Performance Since 2022
San Francisco, March 31, 2025 – Tesla, Inc. (TSLA) has closed out the first quarter of 2025 with a staggering 36% drop in its stock price, its steepest quarterly decline since the final three months of 2022 and the third-worst in its 15-year history as a public company. The electric vehicle (EV) giant saw its market capitalization shrink by over $460 billion, a tumultuous stretch that has coincided with CEO Elon Musk’s high-profile role in the Trump administration and mounting challenges in Tesla’s core business.
A Brutal Start to 2025
Tesla’s stock, which began the year trading at $389.63, plummeted to $249.26 by March 31, according to Nasdaq data, erasing gains that had propelled it to a peak of $479.86 in mid-December 2024. The 36% slide outpaces the 29% drop in Q1 2024 and ranks just behind the 54% cratering in Q4 2022—when Musk sold over $22 billion in shares to fund his Twitter acquisition—and a 37% fall in Q3 2018. The decline has made Tesla one of the S&P 500’s biggest losers this quarter, contrasting sharply with its 63% rally across 2024.
Analysts point to a confluence of factors driving the downturn. Delivery estimates for Q1 2025 have fallen to 377,000 vehicles, per a company-compiled consensus reported by Electrek, marking Tesla’s lowest quarterly deliveries since Q3 2022 and an 8% drop from Q1 2024’s 433,000. Production hiccups, notably the Model Y design changeover across four global factories, have throttled supply, while demand has softened amid fierce competition and economic headwinds.
Musk’s Political Role Sparks Backlash
Elon Musk’s appointment as head of the Department of Government Efficiency (DOGE) under President Donald Trump has cast a long shadow over Tesla’s performance. Since taking the role in January, Musk has spearheaded aggressive federal spending cuts, claiming $140 billion in savings by March 24, per the DOGE website. However, his political activism—including support for far-right movements in Europe and mass layoffs of U.S. federal workers—has triggered widespread consumer boycotts and protests.
In Europe, Tesla’s new vehicle registrations have nosedived—down 50% year-over-year in January, with February sales in Germany plunging 60%, according to industry data. In China, shipments fell 49% in February to 30,688 units, the lowest since July 2022, as rivals like BYD Co. dominate with cheaper EVs and hybrids. U.S. sales have also slipped, with vandalism incidents targeting Tesla showrooms and Cybertrucks reflecting growing public discontent. “Musk’s divisive role in government is an acute pressure point,” noted JPMorgan analyst Ryan Brinkman, who slashed Q1 delivery forecasts from 444,000 to 355,000.
Tariffs and Competition Add Pressure
President Trump’s proposed 25% tariffs on imported auto parts, announced in early 2025, have further rattled investors. With roughly 25% of Tesla’s components sourced from Mexico and China, analysts estimate cost increases could squeeze already thinning profit margins—down to 13.6% in Q4 2024 from 16.8% in 2022, per Tesla’s latest earnings. The Nasdaq, reflecting broader tech sector tariff fears, fell 10% this quarter, its worst since 2022.
Tesla’s aging lineup faces stiff competition from BYD, which sold 4.2 million vehicles in 2024, and emerging players offering low-cost EVs. The Cybertruck, despite a modest 38,965 units sold last year, has underperformed Musk’s 250,000-unit target for 2025, hampered by recalls and weak demand. Meanwhile, promises of a driverless “CyberCab” by June and a budget-friendly “Model 2” remain unfulfilled, leaving Tesla trailing rivals like Waymo in autonomy.
A Glimmer of Hope?
Despite the gloom, some analysts see a potential rebound. Morgan Stanley’s Adam Jonas maintains a buy rating, arguing that Tesla’s long-term value lies in AI and autonomy, not just EVs. Musk, speaking at a Green Bay rally on March 30, called the dip “a buying opportunity,” predicting a “1000% gain in five years” with “outstanding execution.” The stock did rally 11.9% on March 24—its best day since November 2024—after Musk signaled a refocus on Tesla over DOGE.
Yet skepticism persists. Oppenheimer warned of “softening fundamentals,” citing consumer backlash and a 20% cut to 2025 sales forecasts. Piper Sandler, while downplaying brand damage, acknowledged supply constraints as the primary Q1 culprit. Tesla’s Q1 delivery report, due next week, will be a critical test—JPMorgan predicts a miss could push shares toward $120, half their current level.
Shareholders Weather the Storm
For Tesla investors, the volatility is familiar. After a 29% Q1 2024 drop, the stock soared 63% by year-end, buoyed by Musk’s post-election momentum with Trump. Now, with Musk juggling White House duties and a sprawling empire—SpaceX, xAI, and X alongside Tesla—shareholders face uncertainty. “The journey may be volatile,” Jonas wrote, “but 2025 could still reward those betting on Tesla’s tech edge.”
As the dust settles on a punishing quarter, Tesla’s path forward hinges on delivering results—both on the road and in the market—amid a storm of its own making. For now, the EV pioneer’s stock sits at $249.26, a far cry from its December peak, with Wall Street and Main Street watching closely.
