open_in_newOriginal article
Tesla has flirted with disaster before. This time feels different.

Tesla has flirted with disaster before. This time feels different.

  • 25.03.2025 08:23
  • businessinsider.com
  • Keywords: Tesla, DOGE

Elon Musk's political ties are harming Tesla's image, leading to falling stock prices, employee departures, and customer backlash including vandalism and declining sales.

Tesla NewsTSLAsentiment_dissatisfiedJPMsentiment_dissatisfied

Estimated market influence

Tesla

Tesla

Negativesentiment_dissatisfied
Analyst rating: Neutral

Musk's political involvement has caused stock issues and employee concerns.

JP Morgan

JP Morgan

Negativesentiment_dissatisfied
Analyst rating: Buy

Analysts downgraded Tesla stock.

Context

Analysis of Tesla's Current Situation: Business Insights and Market Implications

Overview

  • Key Challenge: Elon Musk's political involvement, particularly his support for Donald Trump and DOGE, has created significant internal and external pressures for Tesla.
  • Market Position: Despite challenges, Tesla remains the world's most valuable automotive company.

Stock Performance

  • Stock Decline: Tesla's stock is down 31% year-to-date as of March 2025, despite a recent rebound post-Musk's all-hands meeting.
  • Net Worth Impact: Musk's net worth fell by $129 billion since Trump's inauguration (Bloomberg Billionaires Index).
  • Analyst Concerns: Longtime Tesla bull Dan Ives expressed concern, urging Musk to "balance and lead" after the stock fell as much as 28% in February.

Employee Morale and Departures

  • Internal Dissatisfaction: Employees are concerned about Musk's political involvement and its alignment with Tesla's original mission of sustainable transportation.
  • Departures: Several employees, including software engineers and managers, have left or are seeking opportunities elsewhere due to concerns over Musk's leadership and political focus.
  • Global Concerns: German workers fear repercussions for speaking out against Musk's political activities.

Competitive Landscape

  • Chinese Competition: Tesla faces intense competition from Chinese manufacturers like BYD, which reported sales topping $100 billion in 2024. BYD unveiled a new model faster than Tesla.
  • Price Pressure: BYD is undercutting Tesla on price, while Tesla struggles with delays in key projects (e.g., robotaxi service).

Customer Backlash

  • Protests and Vandalism: Tesla sales and service centers have faced vandalism, including gunshots, Molotov cocktails, and fires.
  • Sales Impact: New car sales are slumping in major markets:
    • US: Down 11% in January (S&P Global Mobility data).
    • Europe: Registrations fell by 44% in February across 25 markets.
  • Used Car Depreciation: Used Tesla prices are about $10,000 less than non-Tesla EVs (CarGurus data).

Long-Term Implications

  • Brand Crisis: Tesla's image as a political symbol has created a brand crisis, with customers and employees questioning its mission.
  • Strategic Shifts: Musk's focus on DOGE and government roles may divert attention from core automotive and innovation efforts.
  • Investor Sentiment: While some remain bullish (e.g., Ives), others see significant risks. Shareholder Nancy Tengler advises against underestimating Musk but warns of potential pitfalls.

Strategic Considerations

  • Musk's Leadership: His political entanglements have distracted from Tesla's core business, with employees and investors calling for a return to focus.
  • Innovation Challenges: Delays in key projects (e.g., robotaxi, Optimus) raise questions about Tesla's ability to maintain its technological edge.

Conclusion

Tesla is at a critical juncture. While it remains the most valuable automotive company, internal dissent, declining stock performance, and external competition threaten its long-term dominance. Musk's political involvement has created significant reputational and operational risks, potentially overshadowing Tesla's innovation-driven future.