Tesla shares have declined by more than 9% after a significant drop in EU and UK sales in January, plummeting by almost half.

This decline in shares brought Tesla’s valuation below $1 trillion for the first time since November 2024.

Tesla is facing strong competition from Chinese and other manufacturers in the European market.

Furthermore, Tesla owner Elon Musk’s controversial political statements have not helped the company’s standing.

Despite the overall growth in European electric car sales in January, Tesla’s sales fell by more than 45% across the EU, EFTA, and the UK, and over 50% in the EU alone.

This follows a decline in Tesla sales for the first time in over a decade last year, as demand slowed and competitors gained ground.

AJ Bell investment director, Russ Mould, believes increasing competition, particularly from Chinese manufacturer BYD, was a key factor in the sales slump.

Additionally, some car buyers may be boycotting Tesla due to Musk’s political interventions.

Musk has faced criticism for his involvement in reducing US development funds, supporting jailed far-right activist Stephen Yaxley-Lennon in the UK, and backing the far-right AfD party in Germany.

Other political factors may also affect Tesla’s prospects. After the US election, Tesla shares rose due to Musk’s close relationship with Donald Trump.

However, Trump is not a supporter of electric vehicles and has stated he will cancel efforts to promote their adoption.

Investors’ expectations of a positive impact on Tesla from Trump’s presidency were unfounded, according to Mould.

Mould also mentioned concerns about interest rate cuts and potential tariff plans by Trump as contributing to the decline in Tesla shares.