Is Tesla REALLY facing bankruptcy?
Posted on Mar 20, 2025 / USA
Tesla has lost almost half its value due to Elon Musk's actions. Tesla car sales have fallen in Europe, and in the US they are regularly set on fire. Is the company facing bankruptcy?
At the end of 2024 the company's capitalisation was almost 1.4 trillion dollars, now it is only about 750 billion. Journalists and investors believe that Tesla's problems are directly related to its owner, Elon Musk. More precisely, with his actions as the head of the new Department of Government Efficiency (DOGE), as well as with contradictory statements on almost any issue. What is happening with Tesla and is the company really close to bankruptcy, as many write on social networks?
Tesla reached its maximum capitalization of $1.42 trillion quite recently, in mid-December 2024. The company's shares began to grow immediately after Donald Trump was elected for a second presidential term. Elon Musk was one of the largest sponsors of the Republican candidate's election campaign. And after Trump's victory, he also became one of his closest associates. This is what journalists attributed to the growth of Tesla shares and other companies owned by Musk.
However, even then, financial analysts noted that investors' optimism was not supported by fundamental business indicators. The growth of shares was primarily due to the market's enthusiasm for Musk's entry into Trump's inner circle. This meant that, in theory, Tesla could receive additional preferences and advantages over its direct competitors. At the same time, the company's business was obviously growing more slowly than the current share price suggested. Experts said that all this was unlikely to last long, and predicted a decline in the near future.
And so it happened. Tesla shares began to steadily decline in the second half of January, around the time Donald Trump officially established the Department of Government Effectiveness, with Musk as its head. In less than a month, they fell by more than 20%, and Forbes journalists noted that there was growing concern on the market about whether the businessman would be able to fully manage all of the companies he owned.
Some of the billionaire's actions, such as his support for the far-right Alternative for Germany party and his spats with European politicians, have hurt Tesla's reputation outside the U.S. According to Business Insider, the company's car sales in Germany in February fell 76% compared to the same period last year, while overall electric vehicle sales in the country rose 31%. Sales have also fallen in Norway, Denmark, Sweden, France, Australia, and China. Tesla is unlikely to go bankrupt, however.
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