Tesla share price: A 4% decline in Tesla shares in the overnight trade on Wall Street following a slump in European sales has brought the limelight back on the electric vehicle manufacturer’s poor stock market fortune this year.

While the rollout of the EV manufacturer’s Robotaxi, its long-promised driverless taxi service, in Austin over the weekend has kept the stock in the green so far this week, Tesla shares are down almost 28% in the past six months and 19% year-to-date, wiping off almost $63 billion from CEO and the world’s richest person — Elon Musk’s wealth in 2025.

The fall in Tesla’s shares comes amid a multitude of factors like slowing sales amid rising competition, trade policies of US President Donald Trump, whom he helped elect, and valuation concerns around the stock.

Sales slowdown, rising competition

Facing the repercussions of Elon Musk’s politics and rising competition from other EV giants, Tesla reported its fifth straight month of decline in new car sales in Europe to 27.9% in May from a year earlier, even as fully-electric vehicle sales in the region jumped 27.2%. With this, Tesla’s European market share dropped to just 1.2% in May from 1.8% a year ago. The company’s revised Model Y is also yet to show signs of reviving the brand’s fortunes, as per a Reuters report.

Tesla’s sales in Europe have been impacted by increased competition, especially from cheaper Chinese makers such as BYD, as well as European automakers becoming more competitive, which has had a huge impact on revenue, said Ross Maxwell, Global Strategy Operations Lead, VT Markets. Its market share has eroded as consumers look to cheaper alternative models.

“Now that Elon Musk has reduced his political involvements, there is hope that Tesla can turn things around in 2025 with the launch of its revamped Model Y. Early sales remain weak, though, and any turnaround will rely on if it can regain traction and compete effectively on price and performance,” Maxwell added.

The only vehicle Tesla has launched since the 2020 Model Y is the Cybertruck. Tesla has also cut prices on the now ageing models 3 and Y amid slowing electric-vehicle demand globally and rising competition, especially in China, where EVs start below $10,000.

“Tesla’s global deliveries have slowed down, especially in China and Europe, where local competition like BYD, Nio has intensified due to a business war. Demand-side uncertainty in both the US and China has led to supply chain disruptions and raised fears in investors. The company is also facing increased competition in the mid-range EV segment from global players such as Volkswagen, Hyundai, and GM,” Prashant Tapse, Associate Vice President (Research), Mehta Equities, said.

Trump tariffs weigh

Speculation around potential tariffs on US auto and semiconductor exports by Musk’s ally Donald Trump has also eroded confidence in the stock, especially since China plays a key role in Tesla’s market and supply chain, opined Mahesh M.Ojha, AVP Research and Business Development, Hensex Securities.

While Tesla may manufacture a lot of its products in the US, it depends on other countries for auto parts, rare earth metals and batteries. Trump, a frequent EV critic, has often called for scrapping EV subsidies and policies that have added billions of dollars to Tesla’s bottom line.

“Tesla’s ability to navigate the uncertainty and unpredictable nature of tariffs will be based on a multifaceted approach with several options open to them, targeting supply chain issues, political challenges and adapting to increased competition. Tesla could also leverage its factories internationally to try and bypass tariffs,” Maxwell opined.

Tesla shares: Valuation concerns

Despite many challenges, Tesla shares continue to trade at a premium. “Over the last two years, Tesla has traded at a significant premium to legacy automakers. However, the ongoing trade war, margin pressure, and slowing growth have triggered a valuation correction,” Tapse said.

According to a Reuters report, Tesla shares fetch a valuation far above those of the world’s biggest automotive and technology firms, judging by standard financial metrics. Its PE ratio is almost seven times that of BYD, the Chinese automaker that passed Tesla last year as the world’s top EV seller.

This can be attributed to most investors and analysts having bought into Elon Musk’s pitch that the world’s most valuable automaker isn’t really a car company at all, but rather an artificial-intelligence pioneer that will soon unleash a revolution in robotaxis and humanoid robots.

Telsa has been able to sustain these valuations despite reporting a 36% fall in revenue in Q1, making investors wonder if this is a stock still worth buying.

Should you buy Tesla shares now?

A meaningful recovery in Tesla shares isn’t likely right away, said Ojha, adding that much will depend on how US–China trade relations evolve, whether Tesla can improve delivery numbers in the upcoming quarters, and if the leadership narrative stabilises. Until those factors align, a strong rally may be difficult, he opined.

Sharing the strategy for Tesla stock, Ojha said, “Long-term holders might stay invested, recognising Tesla’s underlying strengths, but should be prepared for ongoing volatility. Those looking to enter fresh may want to wait for better clarity on trade policy and earnings momentum. In the meantime, a diversified portfolio remains essential, as Tesla’s long-term story is intact but the near-term road may remain bumpy.”

Tapse also said that long-term investors with 3 to 5 years who believe in Tesla’s AI, energy storage, and autonomous driving potential can consider holding current positions and accumulating slowly on deep dips. For the short term, one should remain on the sidelines, as Tesla will continue to remain volatile until clear clarity on the tariff war, he added.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.