Tesla is one of the top traded stocks this year. But, it’s not for the right reasons.
The company’s stock price dropped 42% in the past year as of when this article was written.
Tesla shareholders are loyal.
The have seen many ups anddowns.
Now, some are wondering if Musk’s involvement in politics is affecting the performance of his company.
The story here isn’t about just a poor quarter or marketing mishap.
There is something deeper going on.
Tesla has something in its boardrooms and on its balance sheet, but most importantly it’s CEO.
Tesla’s edge: Has it lost it?
Tesla was the leader in electric vehicles for many years. Now, it’s lagging.
The sales figures for early 2025 paint a troubling picture.
Tesla registrations in Germany fell 76% from the year before, despite a surge in overall EV sales.
France, Sweden and Australia are also affected.
Tesla has posted its fifth quarter in a row of falling sales, and this is the largest US market for Tesla.
Tesla’s products are part of the issue.
The Model S from 2012 and Model 3 2017 are old, while the competition floods the market with new, exciting EVs.
Model Y is the only car that will still be the best seller in the world by 2024.
Cybertruck remains controversial despite its initial hype and the sales impact of this vehicle is not yet clear.
Brands are under pressure not only because of product cycles but also due to the constant changes in technology.
Tesla no longer only sells cars. It also promotes the image of Elon Musk. Recently, this has become an even harder sell.
Does Musk’s political stance harm Tesla’s Brand?
Tesla’s long-term future is now threatened by Elon Musk’s transition from techno visionary into political insider.
Musk, as the head of President Trump’s Department of Government Efficiency in the DOGE, has been one of America’s most controversial public figures.
Tesla customers, who were once loyal to the company, are now angry about his alignment with Trump and other far-right parties.
Tesla’s foundation was built upon progressive ideas such as clean energy and climate activism.
Tesla customers are now more inclined to dissociate themselves from their brand.
On Teslas in Berlin and San Francisco, protest stickers that read “I purchased this before Elon got crazy” are now a familiar sight.
Cybertrucks have been attacked by arson and charging stations vandalized.
The company’s first sales decrease in over 10 years has resulted from this.
Tesla’s sales worldwide dropped by 1.1% in 2024. Signs point towards a steeper drop in 2025.
Tesla owners are trying to sell their used EVs at lower prices, even though the resale value of Teslas has fallen.
Musk appears unfazed. Musk is said to be betting that Tesla will appeal more to conservative customers.
This strategy has a flaw.
Many Trump supporters are still skeptical about EVs.
Musk could have alienated the traditional supporters of his company without winning over a brand new audience.
What is the fragility of investor confidence?
Tesla stock is on a downhill spiral. Its market cap had dropped to nearly $900billion at one time in March.
Elon Musk’s wealth has shrunk by $144 billion over the past three months. He remains, however, as the richest person in history.
Now, not only retail investors are feeling the pinch. The key institutional investors have begun to rebel. Ross Gerber is a Tesla fanatic who publicly demanded that Musk step down from his position as CEO.
Tesla is not run by him. […] I will say that. Today I made the decision to begin saying I thought Tesla needed a new chief executive officer. You can either come back and become the new CEO at Tesla, or you can focus your efforts on the government. Keep doing what you’re doing and find someone who is a good fit for Tesla.
Christopher Tsai echoed the same view and urged Musk to stop his political involvement and focus on Tesla.
Others vote with their wallets behind the scenes.
SEC filings show that institutional investors have sold over $100 million worth of stock, which is a silent but telling sign of declining confidence.
Tesla supporters are hesitant on Wall Street.
According to a Morgan Stanley study, 85% of respondents believe that Musk’s involvement in politics has “negative” or “extremely negative” effects on Tesla’s operations.
What is Tesla’s financial situation?
The numbers raise serious questions beyond the headlines.
Recent Financial Times research revealed a discrepancy of $1.4 billion in Tesla 2024’s financials.
Tesla, for example, reported an investment of $6.3 billion during the second half 2024. However, the assets of the company only increased in value by $4.9billion.
Tesla still hasn’t explained this huge gap. Tesla has not disclosed any significant sales of assets or impairments. Foreign exchange fluctuation is unlikely to be the cause, given that over 80% Tesla’s assets reside in the US.
In the past, Tesla has closely tracked its reported capex expenditures.
The sudden change in profits is not normal and could be a sign of weak controls within the company or aggressive accounting techniques, like misclassifying costs to increase profit.
Tesla also raised new debt of $6 billion by 2024 despite having $37 billion cash, not paying dividends, and buying back stock.
Another red flag is a pattern that shows a strong cash flow from operations coupled with aggressive raising of capital.
Experts in forensic accounting note that these mismatches are often the precursors to major corporate failures such as Wirecard or NMC Health.
Tesla says it is preparing to make large investments in AI technology, robots and battery tech.
With rising inventory and financial anomalies, it is becoming more difficult to ignore the question of where money goes.
Is Musk still in control?
Musk’s empire, which is growing rapidly, also feels the heat. Throughout the month of March, a SpaceX launcher exploded and a hacker attack brought down X. Service was soon restored.
Musk cannot afford these distractions as Tesla’s main business is in trouble.
Investors are losing patience with Musk, who insists that he manages his companies “with difficulty”.
If Tesla stock keeps falling, there are increasing fears about his other interconnected businesses, such as SpaceX, X and xAI.
Analysts warn that while Tesla stock no longer acts as collateral to Musk’s X purchase, a sustained drop in the price could lead him to sell assets or lose control of X because of liquidity concerns.
Musk’s ties to politics complicate the situation further.
Tesla has up to $22 Billion in US Government Contracts. Musk’s dual position as Trump’s top advisor raises conflict of interest concerns. This is especially true as the DOGE cuts federal jobs sparks lawsuits and public outrage.
Musk can he course correct?
Elon Musk appears to be cornered for the first time since years.
Tesla’s vision, which once rendered it untouchable, is now put to the test. The issue is not only about sales.
Stock price. Trust is the key. It’s about trust.
Tesla will feel the effects of his decision, whether he withdraws from politics or tries harder.
Musk’s days as a man who could do everything unchecked, and without being challenged, are likely to be over.
Tesla investors and Tesla customers have one goal. This is what leadership looks like.
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