Tesla has enjoyed a huge re-rating in the last few months, forcing its shares up fivefold since January.

It is understood that Baillie Gifford clients have received $17 billion from the Tesla share price appreciation since January 1, either from capital gains or banked profits.

Like all institutional investors, the fund management company is bound by strict rules on diversification, meaning that it cannot allow its clients to be too exposed to any single stock. Tesla’s huge ascent had given it too much weight in client portfolios.

Tesla’s shareholding compares with a 6.32% stake declared at the end of June and one of 7.67% at the end of February. At its height in December 2016, its holding was 8.6%. Elon Musk, its chief executive, owns 18% of Tesla.

Shares in Tesla have soared from $86 since the start of 2020, as investors invested in Mr Musk’s vision that the company will be a big winner in the shift to electric cars.

Yesterday they slipped $27.68, or 5.8%, to $447.37. valuing the business at $417bn, The Times reports.

Several British investors indirectly held Tesla through their holdings of Scottish Mortgage Investment Trust, the FTSE 100 company that has been a strong supporter of Tesla for years. It had become the biggest holding for Scottish Mortgage, accounting for 13.4% of the portfolio at the end of July.

James Anderson, a senior figure at Baillie Gifford and co-manager of Scottish Mortgage, said that he would start buying shares again if there was a significant reversal in the Tesla share price. He said: “Tesla no longer faces any difficulty in raising capital at scale from outside sources, but should there be serious setbacks in the share price, we would welcome the opportunity to once again increase our shareholding.”

Baillie Gifford said: “The substantial increase in Tesla’s share price means that we needed to reduce our holding in order to reflect concentration guidelines, which restrict the weight of a single stock in clients’ portfolios.

“However, we intend to remain significant shareholders for many years ahead.”