Earlier this month, President Donald Trump promoted Tesla vehicles with enthusiasm usually reserved for his campaign rallies. Speaking about prices and models, he stated, “I’m going to buy one because it’s a great product, as good as it gets.” Elon Musk, Tesla’s CEO, stood nearby. Many assumed Musk’s proximity to Trump would benefit Tesla. However, Musk’s involvement with the DOGE office and efforts to shrink the federal government have triggered an identity crisis within Tesla. Musk has been shifting politically rightward for years, but public sentiment, analysts, and owners only reacted once it became clear that DOGE was more than just a fleeting interest, with the potential to affect millions of Americans.
Business Insider spoke with over two dozen employees, investors, analysts, and customers to understand how Musk’s involvement in the federal government threatens Tesla’s position as the world’s most valuable automaker. As one former Tesla sales manager noted, “It feels like he’s supporting someone that goes against Tesla’s original mission.”
Musk appears to recognize the stakes. On Thursday, Tesla held a surprise after-hours all-hands meeting livestreamed from its Texas Gigafactory, catching employees and investors off guard. It seemed to be an attempt at damage control. Musk urged employees not to sell their stock and admitted he had been “stretched pretty thin.”
Tesla and Musk are accustomed to dire predictions. Musk has mentioned the company nearly collapsed during Model 3 ‘production hell,’ and critics have repeatedly declared Tesla doomed over the past decade. Each time, Tesla defied expectations and emerged stronger. Now, Musk’s political entanglements present a new challenge as the increasingly unpopular CEO becomes the face of government downsizing.
Tesla is at a critical juncture. For much of the past decade, Tesla has been a Wall Street phenomenon. Its stock surged over 1,000% in a five-year period as employees, investors, and customers remained loyal to one of the few successful green car companies. They overlooked provocative tweets and missed deadlines in exchange for explosive growth. However, since February, Tesla’s stock has plummeted, with JPMorgan analysts calling it the worst slump in auto industry history. The stock is down 31% year-to-date, despite a recent rebound following Musk’s all-hands meeting.
Tesla faces more competition than ever before. Chinese manufacturers like BYD are undercutting Tesla on price while surpassing them in innovation. BYD reported sales exceeding $100 billion last year, surpassing Tesla, and recently unveiled a charging station faster than Tesla’s.
Tesla employees express concerns about Musk’s political involvement and its impact on the company. Several workers have left, citing Musk’s role in politics as moving away from Tesla’s original mission. Resale values for Teslas have fallen, and new car sales are slumping in multiple markets.
Despite these challenges, some remain bullish on Tesla’s stock. Alexandra Merz, a Tesla investor, sees the recent dip as an excellent buying opportunity due to Tesla’s upcoming milestones. Even with the recent crash, Tesla stock is up 63% compared to last year, and it remains the most valuable automotive company globally.
The moment is perilous. Musk’s popularity has fallen alongside his status as a target for public criticism toward the administration. “It’s never been a political symbol, and that’s what Teslas have become,” said analyst Dan Ives. “It’s become a brand crisis.” Even Musk seems surprised by the backlash. “Listen, I understand if you don’t want to buy our product, but you don’t have to burn it down. That’s a bit unreasonable,” Musk said during the all-hands meeting.
— news from Business Insider