Tesla's market value tumbles below $1 trillion as its Europe sales slump

Tesla’s (TSLA.O), opens new tab stock tumbled 8% on Tuesday, pushing its market value below $1 trillion for the first time since November after data showed the electric car maker’s sales slumped in Europe in January.

The European Automobile Manufacturers Association reported that Tesla sales dropped 45% in Europe, compared with a 37% jump in overall sales of EVs in Europe.

The sales decline underscores Tesla’s challenges following a dip in global deliveries last year that has raised pressure on CEO Elon Musk to roll out lower-priced models as well as the autonomous cars that he says underpin Tesla’s future.

Tesla shares dropped to $305, leaving the company with a market capitalization of $981 billion, still over twice the combined value of General Motors (GM.N), opens new tab, Ford Motor (F.N), opens new tab, Volkswagen , Toyota Motor (7203.T), opens new tab, Hyundai Motor (005380.KS), opens new tab and BMW (BMWG.DE), opens new tab.

Some investors are also worried that Musk’s role overseeing a radical downsizing of the federal government, at the behest of U.S. President Donald Trump, is potentially distracting his attention from Tesla as well as damaging the company’s brand appeal to some consumers. Musk also heads privately held space rocket maker SpaceX and other private companies.

“He’s a very hands-on operator, and if you’re spending that much time in an office in the White House, how much time are you spending running all of your other companies, including the one that’s publicly traded?” said Art Hogan, chief market strategist at B. Riley Wealth in Boston.

Read more: Tesla to add city navigation feature to software in China

Concerns about potential over-investment in artificial intelligence are also weighing on Tesla, as well as Microsoft (MSFT.O), opens new tab and Meta Platforms (META.O), opens new tab ahead of AI chip heavyweight Nvidia’s (NVDA.O), opens new tab quarterly report on Wednesday, Hogan said.

Tesla’s stock recently traded at 112 times expected earnings, above its five-year average PE of 93, according to LSEG. By comparison, Ford’s stock is valued at eight times earnings, and GM’s is at seven.

Tesla bulls point to the company’s plan to launch a new, cheaper electric vehicle and to Musk’s promises to launch a paid autonomous car service.

With Tuesday’s drop, Tesla shares remain up 51% over the past 12 months. Year-to-date, the stock is down 24%.