Tesla’s stock is tumbling as CEO Elon Musk’s polarizing rhetoric shakes investor confidence and incites consumers to push back against the EV maker—giving Chinese automakers an opportunity to expand their dominance.
The decline follows sluggish demand, with buyers holding out for the latest model and rivals like China’s BYD gaining ground. Skepticism is also growing over Musk’s divided focus—particularly with his involvement in politics and AI ventures, Bloomberg Intelligence senior U.S. auto analyst Steve Man told The Energy Mix. “Investors are rattled.”
Musk’s alignment with far-right political groups in the United States and abroad—along with his divisive calls for deep government spending cuts—is alienating some Tesla drivers. In Canada, constituents urged a Toronto city councillor to push Tesla dealerships out entirely, though officials say there’s no legal basis for such action, CBC News reports.
Disgruntled Tesla owners have taken to displaying bumper stickers that read, “I Bought This Before We Knew Elon Was Crazy.” And the backlash may be affecting sales—last month, Norway, France, and Spain showed Tesla sales falling by 37.9%, 63.4%, and 75.4%, respectively, reports Wired.
The Financial Times writes Tesla’s sales across Europe in January were 45% lower than during the same time last year. However, analysts suggest the trend could also be attributed to consumers holding off new purchases as they wait for the upgraded Model Y expected this year.
Tesla’s stock value rose last fall when Donald Trump won the U.S. presidential election, with investors assuming Musk’s close ties to the administration would help the business. But shares began sliding after a weak fourth-quarter earnings report in December—and have continued to drop amid concerns that Musk’s involvement in government and other ventures is harming the company.
Competition in the sector and a wider slowing of EV sales growth are also undermining Tesla’s core business, while the goals to release fully autonomous driving technology are falling behind, Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management, told Business Insider.
Man said the drop “isn’t just a blip.” It signals a “weak core auto business likely through the first-half of this year that’s threatening its sky-high valuation and shaking investor confidence in a company.”
Meanwhile, policies Musk helped shape under Trump could hurt Tesla’s bottom line. The company stands to take some losses from Musk’s own efforts to end EV subsidies. The Washington Post just released an analysis that found Musk and his businesses have received at least US$38 billion in government contracts, loans, subsidies, and tax credits, “often at critical moments,” all of which helped “seed the growth that has made him the world’s richest person.”
Musk says Tesla’s competitors will be more affected, but the company is facing a public image failure, with protesters gathering outside Tesla showrooms over Musk’s government spending cuts imposed through his Department of Government Efficiency.
Trump’s “America First” stance is complicating global business for U.S. automakers, making Tesla’s reliance on Chinese production a liability now that international trade and investment are increasingly linked to geopolitics, Longview Global senior policy analyst Dewardric McNeal wrote for CNBC.
As Tesla’s performance falters, its competitors in China have the “green light” to “accelerate their global takeover,” Man said. “While Tesla grapples with stagnant sales, China’s relentless innovation and cutthroat pricing are poised to redraw the battle lines of the EV war.”
Still, Tesla isn’t out of the game. The company is now delivering its Model Y, and the first rollout of its full self-driving capabilities in China “appears to be striking a positive chord with consumers there,” Man said. “Whether this is a short-term dip or a long-term shift hinges on Tesla’s next moves.”
