Telsa’'s stock fell 17 percent this year, dropping 33 percent from its all-time high in December last year, making it the most loser among U.S. tech giants or so-called Magnificent Seven stocks.
The decline in share price is attributed to several factors, including the large-scale decline in U.S. tech stocks, Elon Musk’'s leadership in the acquisition of OpenAI’, and recently BYD’'s announcement to partner with DeepSeek. Meanwhile, optimism about Trump’'s support for Tesla’'s self-driving goals has also waned.
The biggest threat – BYD’'s growing markets
On Monday, China’'s largest electric car brand, BYD, announced that it will partner with DeepSeek to develop its autonomous technology. This news disturbed Tesla’'s shareholders as well as those of other Chinese automakers such as Xpeng and Nio, causing a sharp wave of sales in stocks.
Tesla’ shares on Tuesday, despite a slight recovery the following day %6Losed more than ’. By contrast, BYD’'s shares reached a new peak that day.
Tesla’'s primary concern is its competitiveness against BYD’ in the fully autonomous driving (FSD) market. DeepSeek’in artificial intelligence (AI) model is seen as a very important development in the US-China technology race.
The Chinese startup's R1 model has been shown to be as good as, or even slightly better than, models developed by leading US tech firms, especially OpenAI’nin ChatGPT’si. DeepSeek, however, spent only $600 million to develop its AI model, compared to billions of dollars invested in hyperscalers in the U.S. ’.
Autonomous vehicles, especially Robotaxis, are at the heart of Tesla’'s commercial growth strategy. Currently, Tesla’'s FSD vehicles require human surveillance while driving, and the company is awaiting approval for public road use in China’.
BYD’'s adoption of the R1 AI model, known as the DeepSeek’in DiPilot system, has the potential to rival Tesla’'s FSD technology at a lower cost. In the fourth quarter of 2024’, Tesla missed market expectations in both deliveries and earnings, making it even more important to accelerate the autonomous driving project.
Elon MuskConcerns about ’ moving away from actual business
Also on Monday, reports emerged that Tesla CEO Elon Musk ’ led a group of investors to buy OpenAI’ for $97.4 billion (€93.68 billion). OpenAI, the developer of ChatGPT’, currently has the most advanced Large Language Model (LLM) for generative AI technology. However, despite CEO Sam Altman’'s efforts to make the company public, the organization remains a non-profit organization.
Musk also owns SpaceX, xAI, and the social media platform X’in (formerly Twitter), which he bought more than two years ago. He also serves as ’ in the White House“, a private government employee, and former President Donald Trump is helping ” launch a cost-cutting initiative.
These developments have raised concerns that the world's richest man may be distracted by his many initiatives.
Trump trade is weakening
Tesla became one of the biggest beneficiaries of Trump Trade’ following the election, with its shares almost doubling to the top on December 18, ’. But the stock has since erased most of this year's gains. The decline also resulted from a wider pullback in U.S. tech stocks; probably driven by profit buying and the DeepSeek announcement.
While the U.S. tech sector has been the biggest loser of the S&P 500’, Chinese tech companies have seen their shares skyrocket since the introduction of a cheap AI model by a Chinese startup.
