TSLL (Direxion Daily TSLA Bull 2X Shares), a leveraged ETF that aims to provide 2x the daily returns of Tesla Inc.'s stock, plummeted 5.07% in Tuesday's intraday trading session. This decline was driven by mounting concerns over Tesla's sales performance and its ability to maintain its dominance in the electric vehicle (EV) market.

According to recent data, Tesla's sales in Europe and the UK plunged 45.2% year-over-year in January 2025, despite an overall surge in EV sales in the region. The company's market share dropped from 1.8% to 1%, as rivals like Volkswagen and Chinese brands such as SAIC Motor gained significant ground.

The sharp decline in European sales is attributed to several factors, including increased competition from legacy automakers and Chinese EV manufacturers, as well as potential brand damage from Tesla CEO Elon Musk's increasingly polarizing political activities. Musk's vocal support for far-right parties and criticism of incumbent politicians may have alienated some of Tesla's traditional customer base.

Furthermore, Tesla's sales in China, a crucial market for the company, also faced a slowdown, with a year-over-year decline of around 15% in January. Analysts have cited regulatory hurdles for Tesla's Full Self-Driving (FSD) technology in China and fierce competition from domestic EV makers like BYD as potential challenges for the company's growth in the Chinese market.

Overall, analysts have lowered their expectations for Tesla's first-quarter deliveries, as the company grapples with these sales headwinds and a potential shift in consumer preferences. Some investors are also questioning Tesla's brand strength and whether Musk's political involvement has damaged the company's image in key markets.