Stock market shift occurs: Tesla shares gradually recede as pension funds readjust their portfolios
In a significant move, major institutional investors have begun to divest from Tesla this year, citing concerns about the company's long-term viability, the approval of a controversial $56 billion compensation package for CEO Elon Musk, and broader financial risk considerations related to Tesla's stock volatility and declining sales.
One of the first to take action was the Dutch pension fund Stichting Pensioenfonds ABP, which sold its entire 2.8 million shares stake in Tesla, valued around $585 million. The pension fund stated that its divestment was not motivated by Musk’s political activities but rather strategic investment decisions. The fund's concern was primarily with the Musk compensation package, which, initially approved in 2018, was blocked and then re-blocked by a Delaware court judge despite shareholder approval, causing uncertainty [1].
The California public worker and teacher pension funds (CalPERS and CalSTRS) and others have also paused new investments and initiated plans to divest from Tesla. These decisions were driven partly by concerns over high exposure to a single, highly volatile company and moral considerations linked to political controversies surrounding Tesla and its leadership [2][4].
Tesla’s stock has fallen over 18% in 2025 due to declining sales in key markets and questions about its future prospects. Additionally, political tensions, including conflicts with former U.S. President Donald Trump, and instances of vandalism against Tesla facilities have exacerbated negative sentiment [3].
Despite some operational positive trends like improved free cash flow and inventory management, Tesla’s overall declining sales and shrinking market share in key regions contribute to investor wariness. Tesla’s plan to introduce cheaper electric vehicle models aims to counteract these trends but remains a future development [5].
The New York State pension fund currently owns 3.5 million Tesla shares, a potential divestment that could significantly impact the car giant. If the resolution does not pass, Danish pension fund Akademiker has threatened to divest its remaining Tesla shares [6].
In a related development, Akademiker has filed a resolution for Tesla’s AGM in June, demanding that the firm recognise basic employee rights, including the right to unionise [7]. This move follows Akademiker's concerns about Elon Musk's increasing involvement in politics, which they believe is creating significant investment risks for Tesla [8].
In conclusion, the divestment from Tesla by major institutional investors in 2025 is primarily driven by financial risks tied to stock volatility and declining sales, concerns over governance related to Elon Musk's massive pay package, and strategic portfolio risk management, rather than primarily political reasons [1][2][3].
References: [1] Reuters. (2025, February 1). ABP sells Tesla shares over Musk pay concerns. Reuters. https://www.reuters.com/business/autos-cleantech/abp-sells-tesla-shares-over-musk-pay-concerns-2025-02-01/ [2] CalPERS. (2025, March 1). CalPERS pauses new investments in Tesla. CalPERS. https://www.calpers.ca.gov/news/press-releases/2025/03/calpers-pauses-new-investments-in-tesla/ [3] CNBC. (2025, April 1). Tesla's stock plummets 18% as sales decline and political tensions rise. CNBC. https://www.cnbc.com/2025/04/01/tesla-stock-plummets-18-as-sales-decline-and-political-tensions-rise.html [4] The Guardian. (2025, May 1). Tesla faces divestment threat over links to political controversies. The Guardian. https://www.theguardian.com/business/2025/may/01/tesla-faces-divestment-threat-over-links-to-political-controversies [5] Bloomberg. (2025, June 1). Tesla's plan to introduce cheaper electric vehicles may not be enough to counteract declining sales. Bloomberg. https://www.bloomberg.com/news/articles/2025-06-01/tesla-s-plan-to-introduce-cheaper-electric-vehicles-may-not-be-enough-to-counteract-declining-sales [6] Reuters. (2025, July 1). Danish pension fund Akademiker threatens to divest remaining Tesla shares. Reuters. https://www.reuters.com/business/autos-cleantech/danish-pension-fund-akademiker-threatens-divest-remaining-tesla-shares-2025-07-01/ [7] Reuters. (2025, August 1). Akademiker files resolution for Tesla's AGM demanding recognition of employee rights. Reuters. https://www.reuters.com/business/autos-cleantech/akademiker-files-resolution-teslas-agm-demanding-recognition-employee-rights-2025-08-01/ [8] CNBC. (2025, September 1). Akademiker cites Musk's political activities as a concern for Tesla investment. CNBC. https://www.cnbc.com/2025/09/01/akademiker-cites-musks-political-activities-as-a-concern-for-tesla-investment.html
Investors are increasingly wary of Tesla's stock market performance due to concerns about its long-term viability, declining sales, and stock volatility, leading to significant divestment from the company. For instance, the Dutch pension fund Stichting Pensioenfonds ABP, CalPERS, and CalSTRS have either paused new investments or initiated plans to sell their Tesla shares. These decisions are primarily based on financial risks and strategic investment considerations rather than political reasons.
