Why Is Tesla Stock Falling? Inside the EV Giant’s Worst Quarter Since 2022

Tesla’s stock has entered turbulent territory once again. Investors are asking, why is Tesla stock falling at such an alarming rate? The electric vehicle maker just posted its worst quarter since late 2022, with shares plummeting 36% in the first three months of 2025. This sharp drop has reignited concerns about the company’s fundamentals, political entanglements, and its path forward in an increasingly competitive market.

A Market Rout for Tesla

The 36% plunge in Tesla shares marks the third-steepest quarterly decline in the company’s 15-year public history. The last time the company faced a bigger loss was in Q4 2022, when CEO Elon Musk sold more than $22 billion in stock to fund his $44 billion acquisition of Twitter (now X).

In Q1 2025, over $460 billion in market cap vanished. This loss overshadowed even Musk’s latest efforts as the head of the Department of Government Efficiency (DOGE), where he claims to have saved $140 billion in federal spending.

But why is Tesla stock falling despite these efforts? Investors seem less focused on theoretical savings and more concerned with real-world headwinds facing the EV titan.

Political Chaos and Consumer Backlash

Musk’s dual role in the Trump administration as leader of DOGE has created a political firestorm. His aggressive stance on government cuts and his backing of far-right candidates have led to widespread protests, boycotts, and even violence targeting Tesla stores globally.

Further complicating matters, Trump’s newly implemented tariffs on auto parts from Mexico and China are expected to directly affect Tesla’s supply chain. CNBC reports that these tariffs have fueled a broader selloff in tech stocks, with the Nasdaq falling 10%—its worst quarterly performance since 2022.

Weak Vehicle Sales and Broken Promises

Tesla’s problems extend beyond politics. Sales of new vehicles are down sharply, while competitors are making aggressive gains. Tesla is also under pressure to deliver on long-promised advancements in self-driving tech.

For years, Musk has assured investors that existing Tesla vehicles could become robotaxis with a simple software upgrade. But now, Tesla admits that a hardware upgrade will be required, pushing deadlines and casting doubt on the feasibility of a mid-2025 launch in Austin, Texas.

This pattern of overpromising and underdelivering is another key reason why Tesla stock is falling.

Lessons From the Past

Despite the current downturn, history shows that Tesla stock has bounced back from similar slumps. In Q1 2024, the company experienced a 29% drop due to slowing sales and increased competition. Yet by year-end, shares had surged 63%, rewarding long-term holders who stayed the course.

In a recent rally in Green Bay, Wisconsin, Musk hinted at the same resilience, calling the current dip a “buying opportunity.”

The Road Ahead

The question why is Tesla stock falling has no single answer—it’s a perfect storm of political controversy, operational missteps, regulatory pressure, and weakening consumer sentiment. For traders and long-term investors alike, understanding the broader landscape is critical.