US President Donald Trump has said he will “buy a brand new Tesla” after shares in the electric car firm fell more than 15%.
Trump blamed “radical left lunatics” boycotting the firm to “attack and do harm” to Tesla owner Elon Musk.
However, stock analysts said the main reason for the poor performance of the shares was fear about Tesla meeting production targets and a drop in sales over the past year.
Trump’s own economic policies on tariffs are also making investors nervous, analysts said.
US markets slumped on Monday as investors concerned about the economic effects of Trump tariffs sold shares.
This came after the US president hinted at a potential US recession, telling a TV interviewer that the world’s biggest economy was in a “period of transition”.
Investors fear Trump’s tariffs could push up the pace of price rises and hit economic growth as firms pass on the costs of bringing goods into the country onto customers.
As part of the sell-off, shares in technology firms dropped, with Tesla stock sinking by 15.4%, while artificial intelligence (AI) chip giant Nvidia, Facebook owner Meta, Amazon, and Google-parent Alphabet also fell sharply.
Tesla’s shares recovered somewhat – rising 3.6% – when US markets opened on Tuesday. Other US tech stocks also regained some lost ground.
Tesla’s initial drop came after a UBS analyst warned on Monday that new Tesla deliveries could be much lower than expected this year.
On Tuesday, Trump took to his Truth Social platform trying to drum up Tesla sales, asking “Republicans, Conservatives, and all great Americans” to support Musk, who has been putting his energies into trying to slash federal government jobs.
Despite his comments, Trump policies so far have been designed to limit electric car sales, including his revoking a 2021 order by former president Joe Biden that half of all car sales should be electric by 2030, and halting unspent government funds for charging stations.
Trump’s tariffs could also hurt the manufacturer. Tesla chief financial officer Vaibhav Taneja said in January Tesla parts sourced from Canada and Mexico would be subject to the levies and that this could hit profitability.
Trump said on Tuesday Musk is doing a “fantastic job”, but “radical left lunatics” are “trying to illegally and collusively boycott Tesla” in an effort “to attack and do harm to Elon”.
“I’m going to buy a brand new Tesla tomorrow morning as a show of confidence and support for Elon Musk, a truly great American,” Trump added.
Tesla shares are back to around the level they were before the US election.
They spiked after Trump’s win as investors bet on Musk’s business benefitting from his backing the president.
Mr Musk has been heading up the so-called Department of Government Efficiency (Doge), which is not an official US government agency.
Doge has been trying to make huge cuts to federal funding, and Musk himself has has been voicing support for far-right politics.
His stance has been drawing criticism in the US. About 350 demonstrators protested outside a Tesla dealership in Portland, Oregon, last week, and nine demonstrators were arrested outside a New York City Tesla dealership earlier in March.
Linsay James, an investment strategist at Quilter Investors, said that although there is “an element” of Elon Musk’s politics “having a brand impact”, there were other reasons for the share price fall.
Ultimately the drop “comes down to hard numbers”, she said.
“When we look at new orders, for example in Europe and China, you can see that they’ve effectively halved over the last year,” she said.
Sales in Europe have fallen sharply this year. Across the continent, they were down 45% in January compared to the same month in 2024, according to the European Automobile Manufacturers’ Association (ACEA).
There has also been a steep decline in China – a key market – and Australia.
Other experts have said Tesla is over-valued, so the fall is seen as a correction, while others have pointed to rising competition from some of Chinese electric vehicle companies.
Investors are “certainly getting more worried about an economic slowdown too, so the richest-valued companies like Tesla have been hit hardest in recent days”, she added.
They have also been concerns that Musk has not been focusing on his firms.
In an interview with Fox Business on Monday, he said he was combining the Doge role with running his businesses “with great difficulty”.
Alongside Tesla, his businesses include Space X, which has experienced serious failures in the last two launches of its giant Starship rocket, and the social media network X, which suffered an outage on Monday.
By BBC News
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