Stock prices for Tesla, led by Elon Musk, are experiencing a sharp decline.
Revamped Tale:
Elon Musk's Power Play, Once a Boost for Tesla, Falls Flat
Tesla shares have taken a nose dive, diving over 40% since January – wiping out any gains from the post-election rush. Musk, whose riches are closely tied to his Tesla holdings, has lost a staggering $121 billion from his net worth in the last three months.
So, what went wrong? Why hasn't Musk's meteoric rise to oligarch status managed to revive his "baby" (as referred to by President Trump during their peculiar, advertisement-like press conference)?
There are two primary reasons:
- Tesla's sales are nose-diving worldwide, and...
- Musk isn't making a move to stop it.
While Musk hides away in the Executive Office Building seeking ways to subvert the government, Tesla's core business is in crisis.
Tesla posted its first-ever decrease in global sales last year, and this year isn't looking much better. Wall Street analysts from RBC, UBS, Goldman Sachs, Mizuho, and JPMorgan have all slashed their delivery forecasts for the company.
In China, Tesla is having a tough time keeping up with domestic manufacturers. Last month Tesla shipments in the country plummeted 49% year-over-year. Sales in Europe are slipping too, particularly in Germany, where consumer outrage over Musk's support for a far-right nationalist party with Nazi ties has caused a 76% drop in sales last month compared to the previous year.
Tesla's woes took a double hit from China on Monday.
Its top Chinese rival, BYD, revealed a new charging system that can provide 250 miles of range for their latest models in just five minutes – twice as fast as Tesla's charging speed. Meanwhile, Tesla introduced a free month-long trial of its "Full Self-Driving" software in China – a desperate attempt to reverses its declining market share.
Tesla's stock dropped 5% in the US on Monday and another 5% on Tuesday following RBC's lowered price target due to escalating domestic competition.
All these troubles would be troubling enough for Tesla even with a conventional CEO. But Tesla is steered by Musk, whose image has shifted from "quite peculiar" a few years back to "posting racist and antisemitic conspiracy theories" in 2025.
Tesla did not respond to a request for comment.
Last week, a CNN poll found that 53% of Americans have a negative opinion of Musk, and approximately 60% believe he lacks both the right experience and judgment to carry out the wide-ranging cuts his "department" is undertaking.
Though Tesla remains the best-selling electric vehicle brand in the US, the competition is heating up, and Musk's shift to the right seems to be doing real damage.
Prices on pre-owned Teslas are tumbling at more than double the rate of the typical car, according to research by CarGurus. Used cars overall have dropped 2.7% year over year, while used Teslas have declined 7.3%. A used Cybertruck, Tesla's perplexing experiment in vehicle design that resembles a dare, is worth an astonishing 58% less on the resale market.
A report from Cars.com revealed that while searches for non-Tesla EVs increased 12% year-over-year last month, searches for Teslas dropped 7%.
"We struggle to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly," wrote JPMorgan analysts in a note to clients last week.
Adding to the backlash is a "Tesla Takedown" movement initiated by activists and spreading on social media, encouraging people to sell Tesla vehicles, dump the stock, and stage protests at showrooms.
"I'm dumping this car because I'm embarrassed to drive it," Joe Romer, a Tesla owner in California, told CNN's Julia Vargas Jones. "I'm tired of Elon Musk and all this nonsense that's going on."
Even Dan Ives, a tech analyst for Wedbush and historically one of the most ardent supporters of Tesla, seems to be running out of patience with Musk.
Last week, Ives wrote in a note to clients that while he's keeping his "outperform" rating for the stock, investor patience is "growing thin."
In summary, Wall Street has generally been willing to tolerate Musk due to Tesla's groundbreaking position in the electric vehicle market. Investors can put up with a lot when generating a good return on investment.
However, what happens when Tesla stops being the go-to electric vehicle brand? And what happens when Musk is too preoccupied with administrative duties to correct it? These are the questions that keep investors on edge amidst Trump's tumultuous economic policies.
Musk has become synonymous with Tesla – a connection that benefited both when Tesla seemed invincible, and Musk became the richest person. However, Tesla no longer feels invincible, and Musk doesn't seem as stable. This pairing might prove toxic.
- Despite Elon Musk's reputation and wealth, investors question if Tesla can outperform other electric vehicle brands, especially with the rapid decline in Tesla's resale value and shrinking market share.
- The lack of Musk's attention toward Tesla's core business and the Streets' growing concern about his political affiliations might cause investors to question his capability to lead the company and drive future growth, potentially affecting Tesla's stock value.
- The rise of competitors, such as BYD, that offer faster charging speeds and increased range, have investors questioning the sustainability of Tesla's market dominance, further raising concern about the company's future performance and stock value.
