Tesla Inc. shares fell 5% on Tuesday as multiple negative factors triggered a sell-off in the tech sector. The drop in the stock price of the leading electric vehicle maker was one of the most notable events of the day and weighed on the broader market: the S&P 500 index lost 0.1% and the Nasdaq Composite declined by 0.8%.

The decline in Tesla shares came amid an escalation of the conflict between Elon Musk and Donald Trump, fueling investor concerns about political risks for the company. Additionally, the market reacted to the U.S. Senate passing a tax and budget bill without a provision to limit state-level regulation of artificial intelligence.

Over the past month, Tesla shares have fallen 13%, and since the start of 2025, they are down 26%. Despite the launch of the robotaxi service in Austin, Texas, analysts point to a weak outlook for the company’s core automotive business and high risks for investors.