Even those with only a slight interest in the stock market will probably be aware that Tesla (NASDAQ: TSLA) stock has been in freefall since the beginning of 2025. But while some Fools may be rubbing their hands at the prospect of buying in at a lower price, I’m more inclined to increase my holding in a certain FTSE 100 share instead.
How low can Tesla go?
We can be fairly confident in saying that Tesla’s share price woes can be attributed to two things: Musk’s questionable involvement in Donald Trump’s administration and increasing competition in the electric vehicle space.
This has now started filtering down to the numbers. Sales in Europe and the UK fell by 45% in January with less than 10,000 vehicles being registered. This doesn’t exactly bode well for Tesla’s next earnings update (probably in April).
Quite where the shares find support is impossible to know. But signs that Musk is re-focusing on his business interests over his political aspirations and taking the fight to rivals such as Chinese firm BYD would probably help. As a rule, investors tend to have short memories so long as things get back on track. The risk here is that Musk has done so much damage to his own brand that a swift recovery is off the cards.
Fortunately, there is another option for growth-focused investors like me.
Brilliant timing or lucky break?
Up until recently, Tesla was one of the largest constituents in the FTSE 100-listed Scottish Mortgage Investment Trust (LSE: SMT). This made perfect sense. After all, the trust is devoted to finding and holding the most ‘disruptive’ firms in the world. And regardless of how one feels about Musk, it would be hard to argue that his electric car firm shouldn’t make the cut.
Fast forward to the trust’s latest factsheet (dated 31 January), however, and Tesla no longer features in the top 10 biggest holdings. Interestingly, another, more traditional car manufacturer – Ferrari – does.
Now, whether managers Tom Slater and Lawrence Burns saw the writing on the wall or their decision to sell down their position in Tesla just happened to be seriously well-timed is open to debate. All we know is that the trust’s share price is up 8% in 2025, outperforming the FTSE 100. Tesla stock is down over 25%.
Of course, a general market sell-off could still be bad news for Scottish Mortgage holders like me. A diversified portfolio can only cushion the blow by so much. The last few years have shown just how far even a fund like this can fall if sentiment towards glitzy growth stocks changes.
Moreover, its largest position remains Musk’s (non-listed) SpaceX. So, a sustained revolt against all-things-Elon wouldn’t be ideal.
I’m thinking of buying more
All that said, I’m a long-term investor looking to grow my wealth over decades. Goodness knows how many presidents will pass through the White House over that time. What I am more confident about is that the desire/need for innovation in the world will continue. This is regardless of the companies and leaders that drive it.
This is why I’m considering adding to my position in Scottish Mortgage.
Tesla stock? I’ll leave that to those with stronger stomachs.
