Should you sell or hold Tesla shares in 2025?

In 2025, Tesla’s position on the stock market continues to provoke strong opinions. On one hand, some view it as a pioneer in electric and autonomous mobility; on the other, several controversies and a shifting political landscape weigh heavily on the brand's image. Elon Musk’s media involvement, combined with his role in supporting conservative political figures seeking public spending cuts, worries some investors. Analysts argue that this political association has become paradoxical: attempting to boost confidence in Tesla might instead further politicise it, potentially alienating environmentally conscious consumers.

Given this context, should investors still believe in Tesla’s potential or consider reducing exposure?

Tesla facing political pressure

Elon Musk’s alignment with conservative politics and recent public displays (such as showcasing Tesla vehicles at politically charged events) have reinforced perceptions of Tesla becoming a symbol for a conservative segment. Intended to reassure markets, these moves have instead caused discomfort among many long-standing customers, typically associated with ecological values. In an international climate where environmental issues are highly politicised, Tesla risks losing appeal among liberal consumers, while conservative supporters show limited enthusiasm for widespread adoption of electric vehicles. This disconnect weakens demand and exacerbates concerns over Tesla’s dependency on Musk’s public image.

Tesla share price evolution: recent trends

Here’s how Tesla’s share price has performed over the past 12 months, clearly showing monthly trends, rises, and falls.

A debate on Tesla’s fair valuation

Financial data shows a segment of investors believes Tesla’s market capitalisation remains too high for "just" a car manufacturer. Investment banks warn of a potential correction if sales momentum or public perception continues to decline. Announcements related to autonomous driving and robotics remain promising but have yet to produce expected profits to justify such valuation.

Additionally, some fear Tesla’s pursuit of governmental advantages or contracts might further expose its brand to controversy. Thus, the company’s balance hinges on its ability to deliver technological advances while preserving its reputation for innovation and reliability.

Increasing competition and declining demand

The global electric car market is rapidly diversifying. Established manufacturers (Ford, GM, Volkswagen, and Toyota) as well as newcomers (BYD, Rivian) are strengthening their offerings, often providing vehicles with comparable or superior comfort and pricing. Testimonials from former Tesla owners switching to alternatives they find better-built are increasing. Consequently, sales could decline, particularly in Europe and China, where Tesla was once the undisputed pioneer. Although political headlines and media coverage may spark temporary curiosity, this does not guarantee sustained growth, especially if environmentally conscious customers are ideologically deterred.

Should you sell or hold in 2025?

The decision largely depends on each investor’s profile. Those banking on continued major innovations like advanced autonomous driving or new governmental partnerships might be inclined to hold, believing Tesla can regain momentum. Conversely, shareholders wary of prolonged damage to Tesla’s brand image or a slowdown in deliveries due to intensifying competition may prefer to take profits or reduce exposure.

Monitoring quarterly demand trends, profit margins, and Tesla’s ability to sustain international growth will be crucial. The coming months will be key in assessing the impact of government actions and Musk’s strategy in the long run.