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Tesla (TSLA)’s Global Sales Slump: Market Share Erosion Amidst Competition

Recently we took a detailed look at the Top 10 Trending Stocks and Tesla, Inc. (NASDAQ:TSLA) was one of the stocks that were highlighted in that article.

The volatile tariff policies of the new US administration and a slowdown in AI-related enthusiasm took a toll on the market over the past few weeks. However, some analysts believe a rebound is due.

Fundstrat’s Tom Lee said in a latest program on CNBC that he believes the US stock market will begin to recover starting April 2. Here is how Lee explained the reasons behind his positive outlook:

“When markets fall this quickly from a 52-week high, just remember less than a month ago we were at all-time highs. That is a market pricing in a crisis. I’d say almost 50% pricing in a recession, and we’re assuming there’s no Fed put now. The Fed is in a position to cut rates that really should mitigate the downside. I do think two other things that investors have to keep in mind, because many people just want to get out until April 2nd, is number one, I do think there’s a very high probability that a tariff solution happens before the next three weeks happens. It’s simple to see because China, Europe, Canada, Mexico since April 18th—all of those countries have outperformed the US. I don’t think that markets are that blind to say if Canada and Mexico are about to have a recession, they should outperform the US. The second thing people should keep in mind is that when you have a global crisis brewing—and we highlighted like the 1962 Cuban Missile Crisis—that was a 12-day crisis, but the markets bottomed seven days into the crisis, five days before that crisis ended, the market had already recovered two-thirds of the losses.”

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In

For this article, we picked 10 stocks notable Wall Street analysts were discussing recently. With each stock we have mentioned its latest hedge fund sentiment. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

5. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Funds Investors: 99

Gautam Mukunda from Yale School of Management said in a latest program on CNBC that Tesla, Inc.’s (NASDAQ:TSLA) dependence on China could be used by the country as “leverage.”

“Given the relations between the Trump Administration and Canada, it’s difficult to imagine anyone in Canada buying a Tesla in the foreseeable future. However, there are two bigger threats that are likely to be real, and if I were on the board, I’d be keeping my eye on them. First, Tesla still makes a lot of money in China, and the Chinese government essentially has the ability to use that to put leverage on the second most powerful person in the United States. The odds that they will not use that leverage are close to 0%, which makes it a real threat to a significant portion of Tesla’s revenues. The second threat is that Tesla is the publicly held company most dependent on the image of its CEO as a genius. When you’re doing the sort of things that Musk is doing, like waving chainsaws around on stage, you might start to threaten that image.”

Analysts are looking beyond Elon Musk’s big claims and digesting the harsh reality facing the company. Tesla’s sales are falling all over the world despite the broader industry growth. For example, in California, the largest U.S. market for electric vehicle adoption and sales, Tesla sales fell about 12% year over year in 2024, causing its market share to drop from 60.1% in 2023 to 52.5% in 2024. Was it because Californians are buying fewer EVs? No. Californians purchased more than 2 million electric cars during the year, almost double when compared to the past two years.

Things aren’t looking good for Tesla in Europe, too. For example, in Germany, Tesla delivered just 1,429 new cars in February, down 76% from the same month last year. In contrast, battery-electric vehicle (BEV) registrations surged 30.8% during the month.

Tesla Inc’s (NASDAQ:TSLA) product lineup is showing signs of stagnation, with over 95% of sales still coming from the Model 3 and Model Y. Meanwhile, competitors are rolling out more advanced models. According to Reuters, Tesla’s market share in Europe is slipping as legacy automakers like BMW post stronger sales. Chinese competitor BYD is also gaining ground in Europe, despite talk of tariffs.

Polen Focus Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q4 2024 investor letter:

“The largest relative detractors in the quarter were Tesla, Inc. (NASDAQ:TSLA) (not owned), Thermo Fisher Scientific, and Broadcom (not owned). We’ve spoken at length about our rationale for not owning Tesla. The stock enjoyed a 54% return during the quarter, with effectively all of the share price performance strength coming in the post-election period, as the market expressed a positive view on Elon Musk’s prominent role in the incoming Trump administration and its potential implications for Tesla. While we agree this development should be a net positive for Tesla and recognize the company’s interesting future prospects for autonomous driving and humanoid robots, its current valuation demands that shareholders pay primarily for potential innovations that have yet to materialize, with uncertain risks and timelines, presenting a different type of risk profile than we are comfortable with. Today, Tesla is an automobile manufacturer limited to the higher-income segment and is increasingly challenged to sell vehicles when interest rates are not zero. As such, we continue to question the company’s long-term growth profile, its ability to scale a large robotaxi service (which seems to be the source of euphoria in Tesla shares), and its corporate governance.”

TSLA ranks 5th among our list of the top 10 trending stocks. While we acknowledge the potential of TSLA, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also look at the Top 10 AI Stocks News: Latest Analyst Ratings And Upgrades and the  9 AI News Updates Investors Should Not Miss.

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