Elon Musk’s involvement in various ventures and political matters has significantly impacted Tesla. The market has reacted negatively to Musk’s association with President Donald Trump and his focus on DOGE, leading to a decline in Tesla sales globally. Recalls have damaged the brand’s reputation, and boycotts have contributed to a growing anti-Tesla sentiment.
In the first quarter of this year, Tesla’s profits dropped by 71%, and revenue from car sales fell by 20%. Sales in Europe plummeted by 45% compared to the same period last year, according to the European Automobile Manufacturers’ Association (ACEA). Tesla’s stock has now entered the ‘meme stock’ category, characterized by a cult-like following on social media but accompanied by high volatility and risk.
The question arises—should Musk remain as Tesla’s CEO or step down? While stepping down might help alleviate declining sales and restore the company’s image, Tesla’s stock could crash without Musk’s influence. Musk’s leadership has been both a blessing and a hindrance for Tesla. The brand requires new leadership as its image has suffered, and EV sales have fallen dramatically, partly due to Musk alienating a significant portion of the customer base and focusing too much on autonomous driving rather than diversifying the product portfolio.
Musk’s involvement in numerous projects and frequent blunders have made him too contentious to represent a consumer goods company. Under his leadership, Tesla has launched only one new vehicle in the past five years—the Cybertruck, which has been commercially unsuccessful due to recalls and boycotts. Musk has also been consistently incorrect about Tesla solving the self-driving challenge.
Investors still trust Musk’s claims about solving real-world AI, including humanoid robots and self-driving cars. This belief sustains Tesla’s surprisingly high price-to-earnings ratio (P/E) despite declining earnings. If Musk were to step down, those who trust his claims might sell their stock, potentially causing a collapse.
Thus, while new leadership seems necessary for Tesla’s core business, Musk’s presence is crucial for maintaining investor confidence in the company’s stock price.
— new from Forbes