It’s not only cryptocurrency investors who are seeing red today. If you’re an investor in Elon Musk’s Tesla (Nasdaq: TSLA), the trading day is off to another bad start. That’s because Tesla shares are currently down over 6% to below $267 a share as of the time of this writing.
Today’s early-morning drop is just the latest one for the electric car maker since the beginning of the year, with TSLA shares down over 33% in 2025 so far. Increasingly, they’ve fallen nearer to an important psychological price barrier: $251, which is where they were trading on November 5, 2024 when President Trump won the election.
In other words, Tesla is close to losing all of the gains it had made since Trump’s victory. Exactly why are TSLA shares falling this morning? There are two likely immediate reasons.
Tesla sales crash in China in February
China is Tesla’s second most important market after the U.S. However, sales in the country reportedly fell off a cliff last month. In February 2025, Tesla sold just 30,688 cars in China. That is a staggering decline of 49.2% from a year earlier. It’s also the lowest number of vehicles Tesla has sold in any month in China since August 2022.
However, there are a few one-time events that may have contributed to this drop. First, Tesla had to partially suspend the production of the Model Y in the country due to upgrade work. Second, there was a shift in the Lunar New Year holidays this year, which could have contributed to fewer people car shopping during the February period.
However, as Reuters notes, one-offs weren’t the only reasons behind the fall. During the same month, one of Tesla’s main Chinese competitors, BYD, reported 614,679 vehicles sold—a 90.4% increase.
Tesla is also facing an EV price war in the country. BYD recently released an EV with driving-assistance technology. The starting price of that vehicle is less than $10,000 USD. Tesla’s Model Y starts at around $35,000 USD in China.
And BYD isn’t the only rival Tesla faces in China. Other companies in the country, including Geely and Leapmotor, have recently entered into the EV price wars, heaping more competition on the company.
Tesla’s nearly 50% sales drop in China during the month follows recent falls in other countries. Data from the European Automobile Manufacturers Association (ACEA) shows that Tesla has recently seen a 45.2% drop in the European Union, Britain, and the European Free Trade Area.
Bank of America downgrades TSLA stock
A second bit of news seems to be rattling Tesla investors this morning, too. Bank of America has downgraded Tesla’s stock price. Previously, BoA held a $490 price target for TSLA shares, but now it’s reduced that target to $380.
At $380, that’s still about $110 higher than where Tesla is right now, but it’s a huge drop from the nearly $500 price point that BoA previously had on the stock. It’s worth noting that Bank of America has maintained its “neutral” rating on TSLA shares.
Trump trade wars and DOGE
President Trump’s tariffs on Canada, Mexico, and China in the past day may also be weighing on Tesla stock. Those tariffs—as well as retaliatory actions taken by America’s three largest trading partners—are spooking markets in general this morning.
Economists worry that the tit-for-tat tariffs could signal that the largest economies in the world are on the cusp of a massive trade war—one that would not benefit the economies of any country involved, nor the larger global economy. If the global economy worsens, it could lead to consumers pulling back on spending on everything from cars to computers.
Today’s 6%-plus decline in Tesla’s stock may also partially be blamed on ongoing worries that Elon Musk’s political activities and his involvement with the controversial Department of Government Efficiency (DOGE) may be tarnishing the company’s brand image beyond repair. Not since Steve Jobs and Apple has one man been so connected to a company in the eyes of the public.
If Elon Musk’s political antics continue to generate anger against the buying public—especially the affluent, progressive, environmentally conscious consumers who tend to buy his cars—investors worry those customers may abandon the brand.
Where does Tesla go from here?
Where TSLA shares go from here is anyone’s guess. Tesla recently passed a grim milestone last month when it lost its status as a company with a $1 trillion market cap. As of the time of this writing, Tesla is now worth below $900 billion.
In December, TSLA shares closed at an all-time high of over $488. They have fallen more than $222 since then.
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