Why Tesla Stock Dropped Today

Key Points

• Tesla competitors are gaining ground.

• The company wants investors to focus more on its artificial intelligence (AI) potential than EV sales.

• Sales soared for Chinese competitor BYD.

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Tesla (NASDAQ: TSLA) stock has been on a big run, but it lost some steam today. Shares of the electric vehicle (EV) maker slid as much as 5.4% in Thursday trading. The stock closed the session lower by 4.3%.

While the company has been focusing more of its message toward artificial intelligence (AI) and robotics opportunities, investors seem to still be concerned about slowing EV sales.

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Image source: Tesla.

Tesla keeps losing ground

New EV sales data show Tesla continues to lose its lead versus EV competition. August sales data from the European Automobile Manufacturers' Association (ACEA) showed Tesla sales dropped 37% year over year in the European Union.

At the same time, August was a banner month for Chinese competitor BYD. Its August sales tripled year over year. BYD even outsold Tesla in Europe for the second consecutive month. Year to date, BYD's European sales have soared by 280%, while Tesla's have declined by 33% versus last year.

Tesla CEO Elon Musk has tried to focus investor attention on the company's autonomous driving and robotics technologies. But after a 25% increase in Tesla stock over the last month, the continued decline in its EV sales may have some investors taking profits.

So is Tesla a buy?

Owning Tesla shares means expecting volatility. Musk has touted the expansion of Tesla's robotaxi fleet, but that hasn't yet come to fruition. Any future success of that product could drive shares higher. The same can be said of Tesla's robotics aspirations.

But the humanoid robot and a large fleet of self-driving robotaxis aren't yet a reality. Today's stock action shows some investors aren't willing to hold shares with the hope of long-term success of those products.

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Howard Smith has positions in BYD Company and Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.