Tesla shares dip on slumping Europe sales as valuation falls below $1tn

US markets remain on edge before Nvidia earnings this week

Tesla shares slumped during trading on Tuesday after disappointing European sales. AFP

Tesla shares tumbled on Tuesday after a sharp drop in sales in Europe, while US consumer confidence dragged Wall Street lower.

The electric vehicle maker's sales in Europe and the UK fell by 45.2 per cent year on year in January, according to the European Automobile Manufacturers' Association (Acea). Tesla's drop bucked a wider trend in Europe, where new battery-electric car sales rose by 34 per cent in January and captured a 15 per cent market share, according to Acea.

Tesla closed 8.39 per cent lower when trading ended in the US on Tuesday at $302.80 a share. The company's valuation also fell below $1 trillion, to $973.96 billion.

Tesla reported a drop in sales for the first time in 2024, as the company faces increased competition from China's BYD and other car makers.

It also comes as Tesla chief executive Elon Musk intrudes more into European politics. Mr Musk threw his support behind Germany's far-right AfD party and called to congratulate its co-leader on increasing its support from the last election.

Mr Musk is also a close associate of US President Donald Trump after pouring billions of dollars into his 2024 electoral campaign. Since taking charge of the so-called Department of Government Efficiency (Doge) on January 20, he has sought to drastically reduce the size of the US federal government and cut off foreign aid.

US consumer confidence dips

US markets remained on edge before Nvidia earnings on Wednesday, as weak consumer confidence dragged stocks lower.

Analysts estimate a quarterly revenue of $38.16 billion for 2025's fourth quarter and an earnings per estimate forecast of 0.85, according to data compiled by Yahoo Finance.

Nvidia fell by 2.8 per cent to $126.63 a share, dragging the Nasdaq Composite down 1.35 per cent. The S&P 500 fell 0.47 per cent while the Dow Jones Industrial Averaged climbed 159.95 points, or 0.37 per cent.

Markets dipped after a new report showed US consumer confidence dipped sharply in February over growing concerns of how Mr Trump's policies will affect the economy. The Consumer Board's Consumer Confidence Index fell by seven points to 98.3, its largest drop since August 2021.

“There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current administration and its policies dominated the responses," said Stephanie Guichard, senior economist of global indicators at the Conference Board.

Average 12-month inflation expectations also surged from 5.2 per cent to 5.6 per cent.

“Tariff worries are rattling consumers' cages in a way that they perhaps did not in the current President's first term,” Wells Fargo economists Tim Quinlan and Jeremiah Kohl wrote in a note.

Federal Reserve officials say it is still too soon to know how Mr Trump's policies will affect the inflation battle, although they have indicated in recent weeks they are willing to hold interest rates steady for several months amid policy uncertainty and a lack of progress in bringing down inflation.

“All this uncertainty argues for caution as we look to wrap up the inflation fight. If headwinds persist, we may well need to use policy to lean against that wind,” Richmond Fed president Tom Barkin said earlier on Tuesday.