Tesla Inc. (TSLA) has been under intense scrutiny this year, with critics accusing CEO Elon Musk of overstepping his bounds in politics and distracting from the company’s business woes. Despite its impressive accomplishments, Tesla is facing several mounting problems that threaten its growth.
One major concern is its struggles in Europe, where sales have declined significantly. In Germany, Tesla delivered just 1,429 vehicles in February, a 76% drop from the previous year. This decline is not solely attributed to the Model Y design refresh, as Model 3 sales are also down 40% year-to-date. The timing of these changes makes it challenging to draw conclusions about their impact on sales.
Additionally, Tesla’s financing options have become more aggressive, with loans for new Model 3 orders offering APRs as low as 0%. While this may boost demand in the short term, it also raises concerns about the company’s financial stability. With ample inventory and a challenging quarter, it’s likely that we’ll see further discounts and incentives from Tesla.
The biggest challenge, however, is Tesla’s struggles in China, where sales have declined for five consecutive months on a year-over-year basis. Strong competition from domestic automakers like BYD is to blame, which offers newer, more exciting, and affordable EV options. The Chinese government’s pullback of support, eradication of tax credits, and implementation of tariffs have also contributed to the decline.
Despite these challenges, Tesla shareholders should not sell their stocks just yet. While the company faces temporary problems, its long-term prospects remain promising. If investors’ theses haven’t changed due to these issues, then there’s no reason for a knee-jerk reaction. With Musk at the helm, Tesla is still worth taking a risk on in the future.
Source: https://www.fool.com/investing/2025/03/16/problems-continue-to-mount-for-tesla-is-it-time-to