Why Tesla Stock Plummeted 21.3% in the First Half of 2025 — and What Comes Next

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In the initial half of 2025, the shares of Tesla (TSLA) experienced a significant decline, dropping by approximately 21.3%. This downward trend was observed despite the fact that the S&P 500 index grew by 5.5% during the same period. The decrease in Tesla’s share price occurred even as the broader market was advancing.

In the second part of 2024, Tesla’s stock prices rose due to expectations of favorable political conditions linked to the upcoming presidential election and President Trump’s win. However, these gains paved the way for a substantial decline this year, as political scenarios changed and car sales fell short of expectations.

Tesla stock sank due to vehicle deliveries and political headwinds

To start off January, Tesla unveiled its delivery report for the fourth quarter of last year and revealed that they had sent out a total of 495,570 vehicles during this period. This figure represents an improvement compared to the 484,507 vehicles they delivered in the same quarter of the previous year. However, it’s worth noting that 2024 was the first time Tesla saw a decrease in its annual total deliveries.

In April, the company released its Q1 performance report, indicating they sold 336,681 vehicles during that timeframe, marking a 13% decrease compared to the same period last year. The decline in vehicle sales, notably in European markets, has been quite noticeable this year. It appears that Elon Musk’s involvement in political matters could have had a substantial, adverse effect on the company’s reputation.

During the first half of this year, several aspects contributed to Tesla’s share reductions, one of which was intensifying competition from Chinese manufacturers. Although the company introduced its robotaxi service in Austin, Texas at the end of June, the launch hasn’t managed to maintain a prolonged increase in stock value as of now.

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What’s next for Tesla?

This month’s opening saw Tesla release updates on vehicle production and deliveries for the second quarter. In that span, the company delivered around 384,122 vehicles, marking a drop of about 14% compared to the same period last year. During this timeframe, they also produced approximately 410,244 vehicles – a slight decrease from the nearly 411,000 vehicles manufactured in Q2 of the previous year.

Despite experiencing a drop in deliveries during the quarter, the company’s results surpassed some analysts’ pessimistic expectations, bolstering the stock’s growth. The company’s share price has been influenced considerably by recent events involving Elon Musk and President Trump, suggesting that political triggers could drive further stock fluctuations in the short term. As of now, Tesla’s stock has experienced a 1.3% increase across July’s trading sessions.

At present, Tesla’s market value is approximately $1.04 trillion, which equates to about 10.8 times this year’s projected sales. However, due to recent drops in vehicle deliveries, this valuation carries a substantial level of risk. Nonetheless, investors are hopeful that Tesla’s self-driving taxi project and other expansion plans could yield significant profits beyond the electric vehicle sector.

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2025-07-18 01:51