Tesla Inc. shares dropped sharply on Tuesday following news of a significant decline in sales in Europe. According to the European Automobile Manufacturers’ Association, the company sold 9,945 vehicles in January, marking a 45% decrease compared to the same period last year. Tesla’s share of new car registrations in the region fell from 1.8% to 1%.

This sharp drop contrasts with the overall growth of the European electric vehicle market. In January, new EV registrations increased by 37.3%, accounting for 15% of total car sales in EU countries.

Tesla shares fell more than 9.22% by midday Tuesday, dropping to $300, but partially recovered by the end of the day, closing at $302.80, down 8%. As a result, the company’s market capitalization fell to $974 billion, losing its $1 trillion status for the first time since November.

Rising competition from Chinese automakers and shifting public perception of Elon Musk may put further pressure on Tesla’s stock. SAIC Motor, a major Chinese manufacturer, increased its sales in Europe by 37% in January, while Tesla’s biggest competitor, BYD, continues to expand its presence in the market.

Investor Ross Gerber, previously a strong supporter of Tesla, stated that the sales decline could put long-term pressure on the company’s stock. He predicts a potential 50% drop in Tesla shares in 2024 due to growing competition from BYD and other Chinese manufacturers.