Tesla's stock (TSLA) experienced significant volatility in December 2025, with a sharp 1%+ drop on one Friday followed by a 3.7% surge to $484.70 on December 19. The decline was attributed to broader profit-taking in the technology sector, intensifying global EV competition, and specific operational risks. Tesla's U.S. market share fell to 43.2% in Q1 2025 from 52.7% in 2024, while Chinese rival BYD leads globally. Analyst estimates now project 10.5% lower volumes for 2026 and an 18.5% reduction in cumulative deliveries through 2040.
Operational headwinds included a recall of over 10,000 Powerwall 2 units in the U.S. due to fire risks and market scrutiny over the timeline for removing safety monitors from Model Y robotaxis in Austin. Morgan Stanley downgraded Tesla from Buy to Hold in early December, citing valuation concerns and lower delivery expectations, though some analysts remain constructive on the robotaxi potential, with management targeting expansion to 8-10 metropolitan areas by year-end 2025.
The subsequent stock rally was driven by Tesla's announcement of a $1.2 billion investment in battery cell production at its German gigafactory. The facility is slated to produce up to 8 gigawatt hours of cells annually starting in 2027, bringing total investment in the site's battery segment to nearly €1 billion. This move aims to support local EV assembly and reduce supply chain dependence.
In the UK market, Tesla's Model Y and Model 3 were the top two best-selling EVs in 2025, with 18,890 and 16,361 units sold respectively. However, Tesla's total UK sales are down about 8,000 units from 2024's 50,090, and its market share has dropped to 9.6% from 13.2%. The stock is now approaching key technical resistance near the $500 level, with RSI readings nearing 70, indicating potential overbought conditions.
