Elon Musk’s close ties with President Donald Trump and his controversial political activities are raising concerns among investors about the future of Tesla. The electric car maker’s stock has taken a significant hit in recent months, despite Musk’s growing influence in Washington. On Tuesday, the White House South Lawn was transformed into a miniature Tesla showroom, with Musk lining up Tesla cars to showcase the company’s latest innovations.
Trump promised to brand anyone vandalizing a Tesla car a “domestic terrorist” following reports of vandalism and arson attacks on Tesla cars across the country. Despite performing well following the November presidential election, Tesla’s stock was volatile during 2024 and has declined sharply since the start of this year. Robert Scott, a specialist in international economics and trade policy, said a fall in the share price was inevitable due to its “extreme overvaluation.”
There has been a marked decrease in Tesla sales in Europe and elsewhere.
In February, sales were 76 percent lower in Germany than the previous year, even though overall sales of electric vehicles were 31 percent higher. Sales also fell in Norway, Denmark, Sweden, France, China, and Australia. The main reason for these falls in sales is increased competition from traditional automakers and new electric vehicle companies.
Musk’s political impact on Tesla
Tesla has repeatedly cut vehicle prices to maintain demand, but this strategy has reduced overall earnings and raised concerns about long-term profitability. Musk’s personal wealth is closely tied to Tesla’s stock price, and his acquisition of Twitter has become a financial burden.
Musk was a major financial supporter of Trump’s presidential campaign last year, spending more than $250 million while making personal appearances on Trump’s behalf. Musk’s political activities have caused anger among some in the US, culminating in protests and arson attacks at Tesla dealerships, factories, and charging stations. There has also been a spate of attacks on Tesla vehicles around Europe.
Investors are concerned that Musk’s active participation in the US government is a distraction from his ability to drive his companies to produce promised innovations on time. Trump’s policies, ongoing economic decisions, and perceived influence over Musk could also have significant implications for Tesla. Beyond Tesla’s financial challenges, Musk’s expanding portfolio of businesses has raised concerns about his ability to effectively lead the company.
Musk’s involvement in DOGE, a cryptocurrency project, has also led to a $258 billion lawsuit alleging he artificially inflated the price of Dogecoin through his social media influence.
