Why Tesla stock just continued its freefall

Investors see the Elon Musk-led bid for OpenAI as yet another distraction for Tesla's CEO.

| More on:
a wide-mouthed man looks scared as he grips the wheel of a car while driving in a murky environment.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla (NASDAQ: TSLA) stock has been in freefall, and that accelerated today. Shares of the electric vehicle (EV) leader are now lower by more than 18% so far this year. As of market close, Tesla shares were down by 6.34% on the day.

The recent decline comes as CEO Elon Musk has stayed in the spotlight more for his work in Washington, D.C., than at Tesla headquarters. But today's share decline comes from a combination of reasons.

Chinese competition increases

Investors received news of what could be yet another distraction for Musk from his work at Tesla. The Tesla CEO is leading a group proposing to buy artificial intelligence (AI) developer OpenAI. Musk was one of OpenAI's founders but has more recently been feuding with Sam Altman. Altman is another of the company's founders and remains its CEO. Musk's $97.4 billion bid for the company was met with defiance from Altman.

It pales in comparison to the $300 billion valuation that a new $40 billion funding round reportedly led by Softbank Group would imply. Musk's offer is being viewed as the opening salvo in a new battle with Altman as he seeks to reset OpenAI into a for-profit company. And Tesla investors just see it as another distraction for Musk.

As if that weren't enough to fuel the Tesla bears, Chinese rival BYD also released news that could hurt Tesla's EV sales. BYD introduced its driver assistance system yesterday, making it available on most of its models, including its low-cost EVs priced below the equivalent of $10,000.

BYD said its driver assist system will use DeepSeek's AI. This comes with Tesla still working to get approval from China's regulators for a driver-supervised version of its autonomous driving software.

With the Tesla CEO busy with multiple other ventures and its largest global rival moving forward with its AI-based technology, Tesla stock is taking a hit today. Some may view the decline as an opportunity should Tesla release a fully autonomous vehicle this year. But for now, the freefall in Tesla shares continues.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Should you invest $1,000 in Tesla right now?

Before you buy Tesla shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Tesla wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Howard Smith has positions in BYD Company and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended BYD Company. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

Electric vehicle such as Tesla being charged at charging station.
International Stock News

Tesla searches for Musk successor: Why this matters

Could Elon get the chainsaw from his own board?

Read more »

customers inside and outside a Microsoft retail store
International Stock News

Microsoft shares earnings report: What's the verdict?

Investors moved the Microsoft share price significantly.

Read more »

Warren Buffett
International Stock News

Countdown to Berkshire's AGM: What do investors expect to hear from Warren Buffett this year?

All eyes will be on Omaha, Nebraska this weekend.

Read more »

A smiling woman holds a Facebook like sign above her head.
International Stock News

Meta surges on blockbuster earnings report

It's a good day to be a Meta investor.

Read more »

A family sits on their couch, eyes glued to the television.
International Stock News

Can Netflix be a $1 trillion company by 2030?

How much more can it grow its subscription base?

Read more »

A man looking at his laptop and thinking.
International Stock News

Stock-split watch: Is Nvidia next?

It was nearly one year ago that Nvidia last split its stock.

Read more »

A man looking at his laptop and thinking.
International Stock News

Here's why Berkshire Hathaway stock is a buy before May 2

Giving Buffett and his team your cash to invest for you is likely to be a solid choice no matter…

Read more »

Robot dab indicating a rocketing ASX share price
International Stock News

For Tesla shares, the future rests on autonomous driving and robotics

Tesla has been under pressure lately, with EV demand dwindling.

Read more »