Why Tesla Stock Sank 11.5% in March

Investors in Tesla (NASDAQ: TSLA) are a bundle of nerves now. The electric vehicle (EV) stock sank 11.5% in March after dropping 28% in the previous month, according to data provided by S&P Global Market Intelligence. And the bloodbath isn't over yet -- Tesla stock is down another 12.8% already so far in April and a staggering 44% in 2025, as of this writing.

March was a brutal month, as it hit Tesla from all sides. Declining sales, leadership concerns, analyst downgrades -- you name it, and it was there.

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Tesla stock skids on woes

Weak global sales numbers for February hammered Tesla stock in early March. While Tesla's sales fell across Europe in February, they tanked 76% year over year in Germany, according to Reuters. Australia reported a 66% drop in sales. Meanwhile in China, Tesla's domestic sales fell 11%, while exports from its Shanghai plant plunged 87% in February.

Investors feared the sharp drop in Tesla's global sales were less of a Tesla problem and more a Musk problem. CEO Elon Musk's political affiliations and involvement with the U.S. Department of Government Efficiency (DOGE) has raised concerns about his deviation from the company, even triggering widespread protests and attacks on Tesla cars and stores across the world in recent weeks.

With both consumer and investor sentiment in Tesla taking a hit and more and more analysts turning cautious about Tesla's prospects, the EV stock slumped in March. It has continued to fall since, thanks to weak first-quarter deliveries and President Donald Trump's sweeping tariffs.

Is Tesla stock a buy now?

Tesla produced a little over 362,000 vehicles, but delivered only around 336,000 in the first quarter, down 13% year over year. That's Tesla's weakest quarterly sales in nearly three years.

To be fair, Tesla has just refurbished its hot-selling car, the Model Y, so potential customers most likely postponed purchases in recent months, which may have hurt Tesla's sales in Q1. The Model Y changeover also cost Tesla several weeks of production in Q1.

On the brighter side, Tesla expects to launch several new products in 2025. It just rolled out a more affordable trim of the new Model Y Juniper, with a starting price of $48,990 without the $7,500 federal tax credit. Tesla expects to start its robotaxi business this year and mass-produce Semi trucks by early 2026. Tesla is also going all out on artificial intelligence (AI) and expects to launch its supervised full self-driving (FSD) software, followed by an unsupervised version, in 2025.

The problem right now, though, is twofold: Musk's political activities that are hurting Tesla's brand image, and tariffs. While the former is hurting sales, tariffs could hurt sales and send costs soaring for Tesla. If you can brace for the near-term volatility, though, Tesla's AI vision makes it a stock you'll want to buy and hold for the long term.

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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.