What are the best-selling cars at the beginning of 2025? Hybrid is the favourite technology and electric cars are soaring
MANU GRANDA | MADRID
The almost familial friendship of the boss with the most powerful man in the world can be a significant factor for the interests of a company. Especially if the latter is called Donald Trump and neither avoids rewarding loyalty with personal favors nor takes into account possible conflicts of interest. However, when the spotlights go out and the electoral confetti stops floating, investors look for certainties where they almost always do: in the profit and loss account and future expectations. That is the biggest weakness of Tesla, the weakest link of the Magnificent Seven, and now on the verge of leaving the trillion-dollar club.
The electric car maker has had two months to forget. Since its highs on December 17, the stock has lost 31.5% of its value, while the S&P 500 and the technology-driven Nasdaq have remained virtually flat in that period. This tendency to move below the market, which has already put it in the red so far in 2025, has accelerated after the presentation of mediocre results at the end of January. Total revenue grew in the fourth quarter by 2%, but remained slightly positive only thanks to the energy storage and generation business, while revenue from its vehicles fell by 8%, something that the company attributed to its price cuts on its Model 3, Model Y, Model S and Model X cars.
It's hard to find a better metric. Earnings before interest and taxes (EBIT) in the past three months were $1.58 billion, compared to the consensus of $2.7 billion, and net margin was 6.2%, below the 9.9% expected. Profits fell 53% for 2024 as a whole, to $7.09 billion. That's causing an abrupt, already downward, readjustment of expectations. The profit forecast for 2025, according to the consensus of analysts compiled by Bloomberg, has been reduced by 30%: from the $14.725 billion expected 12 months ago, to the current $10.242 billion, and revenue forecasts have been reduced by 14%: from $132.8 billion to the $113.468 billion that the market now discounts.
The recalculation comes with Tesla trading on the stock market at multiples much higher than those of its direct competitors: the stock is trading at 120 times the expected earnings for 2025, compared to nine times for Toyota, six for Ford and four for Volkswagen. That means that the market still buys the story that its growth potential is much greater, but at the same time, this demanding valuation, more typical of a start-up than a mature company, exposes it to much steeper falls if it fails to meet forecasts or obstacles arise along the way.
The results were far from spectacular, quite the contrary, but they were enough at first to prolong its stock market rally thanks to Elon Musk's ability to sell the future, with an "epic" 2026, and a "ridiculously good" 2027 and 2028, according to his words. In this promising future that Musk drew, a new line of business will play its role. He announced that this June he will begin testing in Austin (Texas), where there is no regulation that prevents it, the payment service for the use of its autonomous cars without supervision. And that it will be extended to many regions of the country by the end of the year, to be fully operational throughout the country in 2026.
While waiting to see the payoffs of that bet, investors have been paying attention to other data. Tesla's sales in Europe in January have plummeted, with declines of 59% in Germany, 63% in France, 75% in Spain, 44% in Sweden and 38% in Norway. What is more striking is that the collapse has also occurred in a context of growth in the electric vehicle market, which amplifies the bad news, since it implies a clear loss of market share for Tesla. In Germany, where it has its only European factory, it has fallen from 14% to 4%.
The reasons for this debacle are not clear. Some analysts explain it by the launch of the new Model Y, scheduled for the first half of the year. According to this argument, many customers are delaying the purchase of their Tesla until its release, instead of opting for the models on the market. However, it is hard to believe that this is the only reason. And others point to the reputational damage that the growing political activism of Elon Musk, its head honcho and visible face, is causing for Tesla.
His support for Trump has propelled him to the head of the Department of Government Efficiency (DOGE), whose job is to cut federal spending as much as possible , but as expected, the South African-born tycoon has not limited himself to carrying out this task quietly, and his political involvement has been gaining in dimension week by week. The turning point was marked by his support for the far-right AfD in the German elections of February 23, including an interview with its leader.
This increased political involvement, even beyond the borders of the United States, is leading to a strong polarisation around his figure. Musk still has a significant number of followers, but the rejection he arouses is growing. And if on social networks this translates into the jump of millions of users from X to Bluesky to avoid inflating the figures of a company that they own, in the automotive industry the effect may be the choice of rival brands.
MANU GRANDA | MADRID
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