Tesla shares fell more than 2% on Monday amid concerns over slumping electric vehicle sales and rising investments in AI and robotics. U.S. EV demand dropped 30% year-over-year in January, partly due to the end of a federal tax credit. The decline comes as the company plans to double its capital spending to $20 billion for ambitious projects like robo-taxis.
Tesla Inc. (TSLA) stock opened the trading week lower, dropping about 2% to $408.60 in early sessions before falling further to $395.88, a 3.78% decline by mid-Monday, according to Benzinga Pro. Broader market pressures contributed, with the Dow Jones Industrial Average down nearly 1.4%, the S&P 500 off 1%, and the Nasdaq slipping 1.1%, as reported by Forbes. This followed President Donald Trump's announcement of raising global tariffs to 15% after a Supreme Court ruling struck down prior levies, prompting an EU response to halt a trade deal.
The core issues for Tesla center on the electric-vehicle market. U.S. EV sales plunged 30% year-over-year in January, accounting for just 6% of new car sales, per Barron’s. The expiration of the $7,500 federal tax credit at the end of September has dampened demand, leading automakers to cut prices. Average EV selling prices fell 3% year-over-year in December, a trend Cantor Fitzgerald analyst Andres Sheppard expects to persist, potentially squeezing Tesla's margins.
Investors are also scrutinizing Tesla's cash flow amid heavy spending. The company plans to invest around $20 billion in new equipment this year—roughly double its typical annual outlay—to support robo-taxis and robotics ambitions. This raises doubts about generating sufficient cash from its core automotive business without a rebound in vehicle sales, especially after Q4 earnings and deliveries declined sharply, as noted in a Seeking Alpha analysis. Year-to-date, Tesla shares have declined about 10%, with the January 28 earnings report contributing to the selloff.
Technically, Tesla trades 5.9% below its 20-day simple moving average and 10.3% below its 50-day SMA, signaling bearish sentiment, though the relative strength index at 42.84 remains neutral. A golden cross occurred in September when the 50-day SMA crossed above the 200-day SMA, but shorter-term weakness persists. Over the past 12 months, the stock has gained 19.59%, trading at 63.7% of its 52-week range.
Upcoming catalysts include the Cybercab and Optimus Gen 3, but progress is expected to be slow, with the market skeptical of near-term returns without strong execution.