Problems Continue to Mount for Tesla. Is It Time to Sell the Stock?

Even if you're hiding under a rock, you might not be able to miss the criticism being thrown Tesla's (NASDAQ: TSLA) way this year. Some consider Tesla CEO Elon Musk's growing presence in politics distracting or problematic. And despite all the impressive things Tesla has accomplished, there are mounting problems for the business. Here's a look at just a few.

European challenges

Last year, global sales of Teslas were down (year over year) for the first time in a decade, and 2025 hasn't started off much better, especially in Europe. For instance, Tesla delivered only 1,429 vehicles in February in Germany -- which used to be its biggest European market -- compared to the more than 6,000 it delivered the prior year. That's a 76% decline.

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Some investors are holding on to hope that Tesla's sales woes are due to the Model Y design refresh, but that's likely wishful thinking. There's also some evidence that the Model Y changes might not have as much impact as one would think. Consider that Model 3 sales are down 40% year to date in Germany, but Tesla was in the middle of a model changeover around this time last year, which would suggest easier comparisons for this year.

Lower APR

Some of Tesla's mounting problems hit closer to home.

Recently, the company announced that it's bringing back highly subsidized financing, with its loans for new Model 3 orders offering annual percentage rates (APRs) of 0% or 0.99%. Some investors cheer the move to boost demand at the end of a challenging quarter; others see it as a sign of desperation and lack of demand.

Amid a challenging quarter with the changeover of the Model Y, and ample inventory, don't be surprised if we see even more discounts or incentives from Tesla.

China woes

Tesla, like many foreign automakers, is struggling in the world's largest electric vehicle (EV) market: China. Its sales have been on the decline for the past five consecutive months on a year-over-year basis, according to the China Passenger Car Association. In February, Tesla's shipments plunged 49% in China compared to the prior year, its lowest monthly mark since July 2022.

Part of the problem is simply strong competition from the growing list of domestic automakers, which offer newer, more exciting, and more affordable EV options. One example of a thriving Chinese automaker is BYD, which sold more than 318,000 full electric and plug-in hybrid vehicles in China last month, a staggering 161% increase from the year prior.

Time to sell?

It seemed 2025 was destined to start off slow for the EV industry, as the new Trump administration openly pulled back support, eradicated tax credits, and implemented potentially industry-crippling tariffs on goods imported from Mexico and Canada. At the same time, Musk has been front and center in some of the Trump administration's more controversial moves via his role leading the Department of Government Efficiency initiative. And that has sparked backlash against Tesla.

But I don't believe that Tesla stock is a sell because it's facing a slight dip in deliveries during a challenging time in China and with tariffs causing uncertainty at home. Tesla shareholders have to keep their eyes on the future. If your investing thesis hasn't changed because of mounting temporary problems, then there's no reason for a knee-jerk reaction. Over the long term, I think Tesla is worth the risk.

Daniel Miller 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.