Tesla Stock Drops Nearly 5% Amid Fears of Autonomous Technology Delays and Competition
The Tesla (TSLA) stock price has been on a downward trend for several weeks, with shares dropping nearly 5% on Monday. This decline is part of a larger pattern of losses that have plagued the company since the start of 2025. Over the past eight weeks, Tesla's market value has shed hundreds of billions of dollars.
The recent drop in stock price is largely attributed to concerns about the company's autonomous technology, specifically its Full Self-Driving (FSD) software. In China, one of Tesla's most significant markets, the company has been struggling with data collection due to government regulations that prohibit the transfer of data from Chinese vehicles to US servers.
To address this issue, Tesla is offering a free trial of FSD on the mainland, which will run from March 17 through April 16. However, this move is unlikely to alleviate investor concerns about the company's self-driving capabilities. The trial is not limited to new buyers but is open to any owner with the latest hardware computer, software, and mapping data.
Tesla's difficulties in China are well-documented. The company has been hindered by the government's strict data privacy laws, which prevent it from sharing collected data with its US-based servers. During Tesla's Q1 earnings call, CEO Elon Musk acknowledged these challenges, stating that the company faces a "quandary" due to restrictions on transferring training videos outside of China and limitations on conducting training sessions in the country.
To overcome these obstacles, Tesla is collaborating with Chinese partners like Baidu to improve its mapping data. This involves integrating non-visual data, such as lane markings and traffic signal locations, into FSD. This approach marks a significant shift for Tesla's self-driving strategy, which previously relied solely on visual data to evaluate road conditions.
However, this development may not be enough to address the concerns of investors and regulators. Tesla's FSD is considered less advanced than rival software used by Chinese brands like Xiaomi, Xpeng, and BYD. In fact, BYD has partnered with DeepSeek AI to co-develop new autonomous technology using its "God's Eye" advanced driver assistance system.
This competition comes at a time when Tesla is already facing challenges in other regions. The company is struggling to maintain sales momentum in Europe, where new, cost-competitive products are gaining traction. In the US, Tesla is experiencing brand erosion due to concerns about Musk's behavior and the company's treatment of employees.
Musk's involvement with the White House's Department of Government Efficiency (DOGE) initiative has been met with criticism from Americans, leading to protests at Tesla showrooms across the country. His support for far-right parties in Germany and the UK has also hurt his standing in those regions.
The latest investment bank to cut its delivery forecast for Tesla is JPMorgan. Analyst Ryan Brinkman now expects Q1 deliveries of 355,000, down 8% year over year and 28% from the 495,000 reported in Q4. This estimate is substantially lower than the firm's prior estimate and below the Bloomberg consensus estimate.
Brinkman's assessment highlights the severity of Tesla's sales decline, stating that it is "one of the most significant losses in the history of the automotive industry." He notes that a similar decline occurred in 2012 and 2017, when Japanese and Korean brands faced deep trade disputes in China.
In conclusion, Tesla's struggles with autonomous technology and competition from Chinese brands have contributed to its declining stock price. The company must address these issues promptly to regain investor confidence and maintain its market share.