Tesla stock fell Wednesday as investors continued to digest a busyweek of politics.
Coming into Wednesday trading, Tesla stock was up about 56% since the Nov. 5 election, but down about 8% since the Jan. 20 inauguration.
Investors are always on the lookout for signs that CEO Elon Musk’s political leanings are hurting his car company. Definitive evidence isn’t easy to find, but some evidence might show that the iconoclast is turning off Californians—and maybe even Europeans.
Tesla stock closed down 3.6% at $378.17, while the S&P 500 rose 0.4% and the Dow Jones Industrial Average added 0.7%. Coming into Wednesday trading, Tesla stock was off about 3% for the week, after a 5% plunge on Monday.
President Donald Trump’s 25% tariffs on Canadian and Mexican imports roiled most auto stocks on Monday. Tesla was hit harder than most, possibly because of Trump’s new Department of Government Efficiency.
Elon Musk is the head of DOGE, which recently gained access to the Treasury payments system, giving it the ability to potentially defund government departments by stopping payments. That caused an uproar: Critics such as Sen. Elizabeth Warren called the moves illegal, while Musk said DOGE was acting at the behest of the president.
So far, investors haven’t appeared to care about Musk’s involvement in the Trump administration. Coming into Wednesday trading, Tesla stock was up about 56% since the Nov. 5 election.
It doesn’t mean they won’t care eventually. They would need a reason to, though. California might give them some.
The residential solar technology company Enphase reported fourth-quarter earnings Tuesday evening. Sales came in at $383 million, better than Wall Street estimates. The company shipped 152 megawatt hours of battery storage in the quarter.
For the first quarter of 2025, Enphase expects sales to come in at about $360 million, with about 160 megawatt hours of battery storage sold. Wall Street was looking for about $350 million in sales and flat storage sales, according to FactSet.
The results and forecasts were good enough to initially push Enphase shares up almost 6% in after-hours trading on Tuesday. Shares opened higher on Wednesday, but gains faded and the stock ultimately finished 1.5% lower.
The reason Enphase is relevant to Tesla is residential battery storage. Tesla’s Powerwall product competes with Enphase’s offerings. Tesla’s Powerwall came up on Enphase’s earnings conference call. Enphase management wouldn’t address market share specifically but talked about their offering being very popular in California. Some of that demand could be coming at the expense of Tesla.
That anecdote, admittedly, doesn’t make a strong case for problems at Tesla. Californian EV sales offer some additional evidence, though.
Tesla’s Californian sales fell 8% in the fourth quarter, its fifth consecutive quarterly decline. For the year, Tesla’s California sales fell about 12%. That is a steeper decline than Tesla’s total U.S. sales, which dipped about 6% in 2024.
The fact that sales underperformed in California still isn’t definitive evidence of a problem. Tesla has more than 50% of the EV market in the state, compared with its overall U.S. share of about 49%.
The story of Tesla sales in 2024 is similar across Europe. Sales dipped 11%, worse than Telsa’s overall drop of about 1%.
Still, Tesla’s second half of the year was—a little—better than its first half in Europe. And Tesla has the two best-selling EVs in Europe: the Model 3 and the Model Y.
That data is through December, but reports are starting to surface that Tesla’s January sales fell in some countries. That is concerning, though the data only covers one month.
The impact of Musk’s politics on Tesla shares is tough to suss out. All investors can do is watch everything, says Eric Markowitz, Nightview Capital’s director of research.