Tesla shares in the rearview as pension funds shift into reverse

For most of the past five years, investing in Tesla has been highly lucrative, as the company became a market leader in the shift to electric vehicles and a symbol of the green transition. Since 2020, its share price has surged from $28.50 to more than $431 at its peak in December 2024. However, the firm’s momentum has stalled since the beginning of this year, with share prices plummeting by 34% in the first three months alone. Meanwhile, global Tesla car sales dropped by more than 8% in March.

Waning institutional investor appetite has been a key factor in this downturn. Among the first to change course was Dutch pension giant ABP, which announced in January that it had sold the remainder of its €597m stake in the EV firm. Chair Harmen van Wijnen stressed that the divestment was not motivated by Elon Musk’s links to the US government but rather by concerns over governance and disagreement on Musk’s pay, which was deemed “exceptionally high”.

Last week, Danish pension fund Akademiker also hit the brakes on its remaining 20 Tesla shares, citing concerns about Musk’s dominance over the company. The fund said that Tesla had once been "a leader in the green transition" but that this status was no longer certain.

However, the fund has stopped short of fully divesting. Instead, it has filed a resolution for Tesla’s AGM in June, demanding that the firm recognise basic employee rights, including the right to unionise. If the resolution does not pass—an outcome that seems likely—Akademiker will divest its remaining shares.

“It is impossible to talk about Tesla without talking about Elon Musk. He is the definition of Tesla. But lately, he has increasingly involved himself in American and European politics. He has publicly supported controversial political figures, spread misinformation, and criticised governments. This has created significant investment risks, as many investors and customers have turned their backs on the company. In short, we believe Elon Musk is in the process of destroying the brand and its value,” Akademiker said in a statement.

While ABP and Akademiker’s public statements may be a warning sign, a far greater challenge for Tesla could arise if their US counterparts follow suit. Last week, a group of 23 Democratic Senators sent a letter to New York State Comptroller Thomas DiNapoli, urging the state’s pension fund to divest. The $273bn fund currently owns 3.5 million Tesla shares—a potential divestment that could significantly impact the car giant.

While investors have been turning away from Tesla, the broader outlook for the EV transition remains optimistic. Global EV sales are expected to increase from 15% of total car sales in 2023 to almost 40%, even under the International Energy Agency’s (IEA) more conservative transition scenarios. In a net zero-aligned scenario, EV sales could surge to 95% of all car sales by 2035, according to the IEA.