Tesla (TSLA) stock was booming as 2024 came to a close, hitting a new all-time high and closing at more than $420 per share. Now sales are getting slammed in Europe and those gains have been all but erased, with most fingers pointing at CEO Elon Musk’s close ties with the Trump administration.
But according to one of Tesla’s biggest supporters on Wall Street, that’s all noise distracting from the company’s long-term potential.
“This is a gut check moment for the Tesla bulls (including ourselves) after this massive sell-off in Tesla shares with fears mounting,” Dan Ives, an analyst at Wedbush Securities and a major Tesla bull, wrote in a Friday note. “The bears own the Tesla narrative in the near-term.”
Sales in Sweden and Norway dropped 42% and 48% last month, while in Germany — where Tesla builds some of its best-selling electric vehicles — deliveries dropped 76%. That follows an across-the-board decline the previous month.
In Australia, sales dropped almost 72%. In California, traditionally Tesla’s biggest domestic market, new vehicle registrations fell 11.6% last year, according to the California New Car Dealers Association.
Musk has spent much of his time since the election working alongside President Donald Trump in Washington, serving as the de facto leader of the Department of Government Efficiency, which has been embroiled in legal battles. He’s also taken time out of his busy schedule to endorse Germany’s far-right Alternative for Germany party and participate in an online campaign to convince British officials to release far-right agitator Tommy Robinson.
Musk’s political activities have cost Tesla about $15 billion in brand value, Brand Finance told CNBC in January.
“While the DOGE/Trump Musk iron clad partnership has created major brand worries for Tesla… we estimate less than 5% of Tesla sales globally are at risk from these issues despite the global draconian narrative for Musk,” Ives wrote.
Tesla stock was mostly flat in Friday morning trading. But it’s down about 30% so far this year.
Wedbush expects that as DOGE ramps up its work across the federal government, which has produced a massive surge in layoffs, Musk will split his time more evenly between DOGE and his largest companies, Tesla and SpaceX. Adding to his responsibilities are his work at the other companies in his portfolio, such as X, xAI and Neuralink.
Ives said he views the Trump administration as the “best thing that ever happened to Musk and Tesla,” citing a push to develop a federal approach to regulating autonomous vehicles. The Austin, Texas-based automaker plans to launch a ride-hailing service in at least two states this year using vehicles equipped with its advanced driver assistance package. Tesla’s designated robotaxi, the Cybercab, is scheduled to enter volume production next year.
Wedbush is also excitedly eying Tesla’s Optimus humanoid robots, which the company has been working on for several years.
Musk has frequently described the robots as, eventually, being capable of doing anything from factory work to serving as a bodyguard or teacher. Tesla hopes to build 10,000 Optimus robots this year and enter volume production in 2026, with plans to eventually sell them for between $20,000 and $25,000.
“We believe autonomous and Optimus will represent 90% of the valuation of the Tesla story and create a company with a valuation that exceeds $2 trillion,” Ives said. After recent sell-offs, Tesla’s market capitalization is $830 billion.