Earlier this month, on the White House driveway, President Donald Trump passionately promoted a fleet of shiny Teslas, echoing the enthusiasm typically seen at his campaign rallies. Holding handwritten notes detailing prices and models, he declared, "I'm going to buy one because it's a great product, as good as it gets." Standing nearby was Elon Musk, the CEO of Tesla and a prominent figure within the Trump administration. Many observers believed Musk's close association with Trump could yield positive outcomes for Tesla. However, Musk's involvement with the DOGE office and its agenda to reduce the size of the federal government has sparked an existential dilemma for Tesla.
For years, Musk has been subtly shifting his political stance to the right. The public perception and sentiment towards him and Tesla did not begin to sour until it became evident that DOGE was more than just a fleeting trend—it had the potential to influence millions of Americans. To gauge the implications of Musk's political engagements on Tesla's standing as the world's leading automaker, Business Insider consulted over two dozen employees, investors, analysts, and customers. A former Tesla sales manager articulated the sentiment: "It feels like he's supporting someone that goes against Tesla's original mission."
Recognizing the stakes, Musk organized a surprise all-hands meeting at Tesla's Texas Gigafactory, which was livestreamed to the public. This unexpected event caught both employees and investors off guard and seemed aimed at managing the growing concerns surrounding Tesla. Musk urged employees not to sell their stock and candidly admitted to being "stretched pretty thin." Historically, Musk and Tesla have faced dire predictions, having previously weathered the storm during the notorious Model 3 production challenges. Each time, Tesla has defied the odds and emerged stronger.
For nearly a decade, Tesla's stock has been a phenomenon on Wall Street, soaring over 1,000% in just five years. Employees, investors, and customers have remained loyal despite Musk's controversial tweets and missed deadlines, driven by the promise of explosive growth. However, February marked a turning point; what started as a gradual decline transformed into a significant stock slump that analysts at JPMorgan deemed the worst in the automotive industry’s history. Year-to-date, Tesla's stock is down 31%, although there was a slight rebound following Musk's all-hands meeting.
Amid the stock's decline, Howard Lutnick, Trump's commerce secretary, urged Americans to invest in Tesla, emphasizing that prices would not be this low again. Meanwhile, Musk's net worth has plummeted by $129 billion since Trump's inauguration, as reported by the Bloomberg Billionaires Index. Musk has publicly addressed the protests occurring at Tesla facilities, encouraging employees to adopt a long-term perspective regarding their investments. He underscored Tesla's potential in robotics and self-driving technologies, confidently predicting that the company will likely become the most valuable enterprise globally.
Despite Musk's optimistic outlook, some analysts and employees have voiced concerns about the impact of his political entanglements. Tesla's long-time advocate, Dan Ives, expressed that Musk needs to "take a step back" and refocus on his role as the CEO. Ives emphasized that "leaders need to lead." Furthermore, Musk's commitment to DOGE—evidenced by his private jets frequently landing near Tesla facilities and a noticeable absence of company-wide communications since June—has added to investor anxiety. Key projects, including the much-anticipated robotaxi service and the Optimus robot, are now shrouded in uncertainty.
As Tesla grapples with internal challenges, it faces unprecedented competition. Chinese manufacturers, such as BYD, are not only undercutting Tesla on price but are also outpacing them in innovation. Recently, BYD announced sales exceeding $100 billion, surpassing Tesla's performance. Additionally, they unveiled a charging station claimed to be faster than Tesla's, illustrating the growing competitive landscape.
While Wall Street analysts may be apprehensive, many Tesla employees maintain a sense of detachment regarding stock price fluctuations. A veteran employee noted that the tumultuous nature of Tesla's journey has desensitized them to the ups and downs. However, others are beginning to express unease over Musk's political involvement and its implications for Tesla's core mission of promoting sustainable transportation.
Concerns have escalated, especially following the termination of a Tesla manager who criticized Musk's controversial social media posts. With multiple employees contemplating departures due to Musk's political focus, the corporate culture within Tesla is increasingly fraught with anxiety. One engineer conveyed that remaining with the company under Musk's leadership has become a moral dilemma.
As public sentiment shifts, Tesla employees and salespeople are facing heightened hostility. Reports indicate a surge in vandalism at Tesla sales and service centers, with incidents ranging from gunshots shattering windows to Molotov cocktails thrown at vehicles. Sales staff have encountered disgruntled customers and prank callers, often advised by management to avoid confrontation with protesters.
The fallout from these controversies is also evident in the resale market for Teslas, which has significantly declined. According to CarGurus, resale values for Teslas are roughly $10,000 lower than those of comparable electric vehicles. Additionally, new car sales are experiencing a slump, with key indicators showing a decline in Tesla registrations across various markets, including an 11% drop in the US and an average 44% decrease across 25 European countries.
While some Tesla owners have intensified their support for Musk amid the protests, others have opted to express their dissent by adding anti-Elon stickers to their vehicles or selling them altogether. The sentiment among many former owners is clear: Musk's political activities are influencing their decisions, driving them toward rival electric vehicle brands.
Tesla has faced near-collapse multiple times since its inception. However, Musk possesses a unique ability to recalibrate and adapt, as noted by shareholders like Nancy Tengler. Despite recent challenges, some investors remain optimistic about Tesla's future. Analyst Dan Ives continues to endorse the stock, viewing it as a key player in the automotive industry. Retail investors have also shown resilience, purchasing shares during the recent downturn, with influencers like Alexandra Merz suggesting that long-term investors should remain focused on Tesla's potential milestones.
Even in the face of adversity, Tesla retains its position as the most valuable automotive company globally. However, Musk's entanglement in political affairs has transformed Tesla into a contentious symbol. As Ives stated, "It's never been a political symbol, and that's what Teslas have become." With the stakes higher than ever, Musk's ability to navigate this complex landscape will be crucial for Tesla's future success.
