Tesla’s Stock Hits a Red Light: Market Cap Drops Below $1 Trillion
Tesla’s Bumpy Ride: Stock Skids Below $1 Trillion as European Sales Brake Hard

Tesla’s stock plunged 8% on Tuesday, dragging its market capitalization below the $1 trillion mark for the first time since November. The dramatic decline follows concerning sales data from the European Automobile Manufacturers Association, which revealed that Tesla's sales in Europe fell 45% in January.
The drop in sales is a stark contrast to the broader European EV market, which saw a 37% surge during the same period. This downturn has amplified investor anxieties about Tesla's ability to maintain its dominance in the global electric vehicle (EV) market.
Mounting Pressure on Elon Musk
Tesla’s struggles are not just about declining sales. Investors are increasingly concerned about CEO Elon Musk's growing list of responsibilities, particularly his involvement in overseeing the radical downsizing of the U.S. federal government under President Donald Trump.
Art Hogan, chief market strategist at B. Riley Wealth, voiced these concerns, questioning Musk’s ability to juggle multiple high-profile roles. "He's a very hands-on operator, and if you're spending that much time in an office in the White House, how much time are you spending running all of your other companies, including the one that's publicly traded?" Hogan remarked.
Valuation Woes: Tesla vs. Legacy Automakers
Despite the latest stock decline, Tesla’s market cap still dwarfs legacy automakers. At $981 billion, Tesla remains valued at more than twice the combined worth of General Motors, Ford, Volkswagen, Toyota, Hyundai, and BMW. However, concerns about Tesla’s valuation persist.
Tesla currently trades at 112 times expected earnings—far above its five-year average price-to-earnings (P/E) ratio of 93. By comparison, Ford and General Motors have P/E ratios of 8 and 7, respectively. The disparity raises concerns about whether Tesla's stock is overvalued, particularly as its growth story faces increasing scrutiny.
AI Ambitions and the Road Ahead
Investor skepticism extends beyond Tesla’s EV business. Some fear that Musk’s aggressive push into artificial intelligence (AI) could become a costly distraction. Tesla's focus on self-driving technology and Musk’s promise of a fully autonomous vehicle service have yet to materialize into tangible profits.
At the same time, broader concerns about AI investments are weighing on major tech stocks, including Tesla, Microsoft, and Meta. Investors are closely watching Nvidia’s upcoming earnings report, which could set the tone for sentiment around AI-driven stocks.
A Glimmer of Hope?
Despite the turbulence, Tesla bulls remain optimistic. The company has hinted at launching a more affordable electric vehicle, a move that could reignite demand and help Tesla regain lost ground. Musk has also teased new developments in autonomous driving technology, which could become a major revenue driver in the future.
For now, however, Tesla’s stock is in retreat. While it remains up 51% over the past 12 months, the stock has fallen 24% year-to-date, raising questions about whether Tesla can maintain its lofty valuation amid rising competition and internal challenges.
