TLDR
- Tesla stock dropped over 3.5% in early trading Monday as multiple pressures hit the electric vehicle maker at once
- European sales collapsed 88% year-over-year in January 2026, with only 83 vehicles registered in Norway, a traditionally strong market
- Chinese competitor BYD grew European sales 269% in 2025 while Tesla’s European registrations fell 27% for the year
- Tesla announced a $2 billion investment in CEO Elon Musk’s xAI venture despite a failed November shareholder vote on the proposal
- U.S. EV sales dropped 36% in Q4 2025 after federal tax credits ended, with Tesla’s domestic sales down 15% year-over-year
Tesla stock tumbled more than 3.5% in Monday morning trading as investors digested a brutal January sales report from Europe. The decline came as broader market volatility added pressure across tech stocks.
The company registered just 83 vehicles in Norway during January 2026. That number represents an 88% collapse from the same month last year. Norway has historically been one of Tesla’s most loyal markets.
The European weakness isn’t new. For all of 2025, Tesla’s registrations across Europe fell 27% to 238,656 vehicles. January’s numbers suggest the downward trend is accelerating rather than stabilizing.
Meanwhile, Chinese rival BYD posted 269% growth in Europe last year. The company registered 187,657 vehicles and continues taking market share from Tesla. BYD’s overseas sales now account for nearly half its total volume.
Industry watchers point to two main factors behind Tesla’s European struggles. The Model Y hasn’t received a major refresh in four years. CEO Elon Musk’s political activities have also damaged the brand in some markets.
Domestic Market Faces Headwinds
The U.S. market isn’t providing much relief. American EV sales dropped 36% in the fourth quarter after federal purchase tax credits ended in September. Tesla sold 138,000 vehicles domestically in Q4, down 15% year-over-year.
Tesla’s market share actually increased in the shrinking U.S. market. But the overall pie got considerably smaller. That’s a problem when the company carries a $1.3 trillion valuation.
A Financial Times report suggested Ford might collaborate with Chinese EV makers to bring their vehicles to America. Ford quickly denied the story. So did Xiaomi. Still, the report highlighted growing competitive threats.
Any Chinese vehicles sold in the U.S. would need domestic manufacturing to avoid steep tariffs. Such deals take years to develop. But the possibility adds another layer of uncertainty.
The broader market didn’t help Monday. Gold dropped 6% and silver fell 10% as the CME Group raised margin requirements following Friday’s rout. Leveraged investors sold across growth stocks, including Tesla.
The xAI Investment Question
Tesla announced a $2 billion equity investment in xAI on January 28th. The artificial intelligence venture is owned by CEO Elon Musk. The move raised governance concerns among some shareholders.
A similar proposal failed to pass a shareholder vote in November. Abstentions exceeded votes in favor. Tesla proceeded with the investment anyway.
The company is cutting production of the Model S and Model X entirely. Manufacturing capacity will shift to the Cybercab robotaxi and xAI operations. That strategy bets heavily on self-driving technology and humanoid robots reaching commercial viability soon.
UBS maintains a Sell rating on Tesla with a $352 price target. The firm cites valuation concerns and brand damage despite the company’s AI ambitions. Thomas Monteiro at Investing.com noted Tesla is asking investors to fund potential software and robotics revenue before the core auto business stabilizes.
Analyst sentiment remains divided. Some see the AI pivot as visionary. Others view it as a distraction from fixing fundamental automotive problems. The stock’s recent volatility reflects that divide, falling 3.5% after Q4 earnings before rebounding 3.3% the next day.
BYD sold 210,051 vehicles in January globally, down 30% year-over-year as its home Chinese market softened.
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