Why Tesla Stock Is Plummeting Today

Shares of Tesla (NASDAQ: TSLA) are trading lower on Tuesday. The company's stock lost 7.3% as of 10:45 a.m. ET and lost as much as 7.6% earlier in the day. The drop comes as the S&P 500 lost 0.9%, and the Nasdaq Composite lost 1.7%.

The electric vehicle (EV) pioneer is seeing its sales in Europe crumble according to a report by Bloomberg released Tuesday.

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It's not the market, it's Tesla

New sales of Tesla vehicles throughout Europe hit their lowest point in years, despite overall sales of EVs soaring in Europe in the same period. The company's January sales were down 45% year over year while EV sales industrywide were up 37%. The 9,945 new cars Tesla registered are a far cry from last year's 18,161.

This also marks the first time that Tesla sold fewer cars in the U.K. than its Chinese rival BYD.

The Musk effect

Some of the drop-off can be explained by the company's manufacturing changeover: It is shifting operations to produce more of its popular Model Y SUVs. However, the effect of the company's increasingly polarizing CEO, Elon Musk, has likely helped drive the decline.

The Tesla chief has been vocally supportive of Germany's far-right AfD party, even making virtual appearances at campaign events. In the U.K., Musk has been highly critical of Prime Minister Keir Starmer and the U.K. government. In early June he created a poll on X asking whether "America should liberate the people of Britain from their tyrannical government."

This behavior has turned off many Europeans and may be playing a significant role in Tesla's drop in sales, although it's impossible to know just how much. Recent polls from the U.K. show Musk's unfavorability rating -- steadily rising over the last year -- moving sharply upward in January. In Germany, the vast majority of respondents -- 73% -- found Musk's involvement in its politics unacceptable.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.