Tesla (NASDAQ: TSLA) shares have plummeted 36.8% year-to-date, with a brutal 10.4% drop on Friday alone, marking a dramatic reversal for the once-untouchable EV pioneer. What began as concerns over slowing sales has evolved into a perfect storm of challenges that threaten the company’s market position and investment appeal.

Delivery Numbers “Suck”

Tesla delivered just 336,681 vehicles in Q1 2025, a 13% year-on-year decline and the lowest level in three years. This significant miss against analyst expectations (377-380K) reveals the company’s deteriorating market position. European sales have been particularly dire, with registrations dropping more than 40% year-on-year in January and February. France saw a 37% drop in March, while Swedish sales collapsed by a staggering 64%.

Former Tesla bull Ross Gerber pulled no punches in his assessment: “These numbers suck. The brand is broken and may not be fixable.”

The Musk Factor

While increased competition from BYD and other rivals has contributed to Tesla’s woes, many analysts point to Elon Musk’s divisive political activities as the primary catalyst for the brand’s deterioration. His close association with the Trump administration as head of the Department of Government Efficiency (DOGE) has sparked global backlash.

“The more political [Musk] gets with DOGE the more the brand suffers, there is no debate,” noted Wedbush analyst Dan Ives. This political entanglement has inspired worldwide protests under the “Tesla Takedown” banner, with demonstrations outside showrooms across America, Europe, and Australia.

Protesters’ message is clear: “Hurting Tesla is stopping Musk.” The movement has generated substantial momentum, with some Tesla dealerships closing on weekends due to persistent demonstrations. One Berkeley showroom has remained shuttered every Saturday for the past month.

Valuation Remains Sky-High

Despite its troubles, Tesla continues to command a lofty valuation. With a price-to-earnings ratio hovering around 130, the stock still appears significantly overvalued compared to traditional automakers. Ford trades at a P/E of just 6.7 with a 7.7% yield, while General Motors sits at 7.3.

This persistent premium reflects lingering investor optimism about Tesla’s future potential beyond vehicle sales, including its growing energy storage business, which deployed 10.4GWh of products in Q1 – a substantial increase from the previous year.

Analyst Outlook Mixed

Analyst sentiment on Tesla remains divided. The consensus price target sits at $326.30, suggesting 22% upside from current levels, with the most bullish forecast predicting a 105.7% rise to $550. However, Deutsche Bank recently lowered its price target from $420 to $345, citing a “major reset” of its auto volume expectations.

The bank now forecasts a 5% year-over-year decline in 2025 deliveries to approximately 1.7 million vehicles, with weakness in Europe and the delayed rollout of the more affordable Model Q hampering growth prospects.

Light at the End of the Tunnel?

Reports that Musk may soon step back from his DOGE role prompted a brief share price recovery. But with the White House dismissing these claims as “garbage,” Tesla investors may face continued turbulence.

New York City’s Comptroller has announced plans to sue Tesla on behalf of the city’s pension systems, claiming they’ve lost over $300 million in three months due to the plunging stock price. “Elon Musk is so distracted that he’s driving Tesla off a financial cliff,” Comptroller Brad Lander stated.

For investors, the fundamental question remains: does Tesla’s innovative technology and market position justify its premium valuation amid mounting headwinds? With Trump’s proposed 25% tariffs on foreign-made vehicles threatening to disrupt supply chains and elevate production costs, even Tesla’s American manufacturing base offers limited protection.

Unless Musk refocuses on his businesses and repairs Tesla’s tarnished brand, the company’s stock may continue its downward trajectory – regardless of how many GWh its energy division deploys or how promising its unrealised ambitions in robotaxis and humanoid robots might seem.