In a surprising turn of events, Tesla CEO Elon Musk found himself in the spotlight as US President Donald Trump offered a public endorsement for Tesla. Standing beside a red Tesla Model S at the White House, Trump announced plans to purchase the electric vehicle for White House staff, emphasizing his commitment to paying the full price.
This endorsement arrives amidst growing scrutiny of Musk’s political engagements, particularly his support for far-right parties in Europe, which has led to significant fluctuations in Tesla’s stock value. Musk’s efforts to gain presidential support appear to be a response to protests, boycotts, and even sabotage incidents targeting Tesla. Trump has labeled these acts as “domestic terrorism.”
Political Controversies Affecting Tesla Sales
Tesla’s sales have been declining, exacerbated by Musk’s political involvement. In Germany, after Musk endorsed the far-right AfD party on his platform X, Tesla registrations dropped 76% in February compared to the previous year, despite an overall increase in EV registrations. Similar trends have appeared in France and Australia.
In California, Tesla’s largest market in the US, sales have decreased for five consecutive quarters, with an 11.6% drop in 2024. Consumers seem wary of Musk’s political ties and have expressed their dissent through stickers on Teslas reading slogans like “Vintage Tesla — Pre-Madness Edition.”
“Musk thinks he can say anything he wants to and doesn’t think Tesla will suffer any consequences,” stated Morningstar analyst Seth Goldstein. He noted that Tesla now faces more competition than before.
A Strategic Vision survey highlighted that while both Republican and Democrat voters favor EVs, Tesla was not their top choice.
Daniel A. Crane, a law professor at the University of Michigan, pointed out that Tesla was once closely aligned with environmental causes, attracting left-leaning consumers. However, with Musk’s recent political actions, that demographic might be shifting away from Tesla.
The Impact of Market Competition
The competitive landscape for EVs has intensified, leading to a 50% drop in Tesla’s stock over three months. Musk’s net worth has similarly declined by $144 billion amid doubts about Tesla’s autonomous driving capabilities.
Following his $250 million support for Trump’s campaign, Musk’s advisory role in the Department of Government Efficiency (DOGE) has sparked controversy, particularly due to drastic public spending cuts.
Protests Against Musk’s Government Role
Protests have erupted across the US, criticizing Musk’s involvement in DOGE, which has canceled approximately $60 billion in humanitarian contracts. Concerns have been raised regarding Musk’s access to government data without Senate confirmation.
Don Moynihan from the University of Michigan expressed concern over Musk’s influence and lack of security clearance. His comments underscore the unprecedented nature of Musk’s government role.
Musk’s Expanding Business Empire
Beyond Tesla, Musk owns Space X, Neuralink, xAI, and The Boring Company, all of which have increased in value post-election. While Tesla’s value fell, these companies saw a collective 45% rise.
Musk’s firms hold federal contracts valued between $18 billion and $22 billion, raising questions about conflicts of interest given his role in DOGE.
Calls for Leadership Change at Tesla
Amidst these challenges, calls for Musk to step down as Tesla CEO have emerged. Brad Lander, New York City’s comptroller, suggested Musk remain on the board but step away from the CEO role to improve governance.
Dan Ives from Wedbush Securities emphasized the need for Musk to balance his commitments, suggesting a refocus on Tesla to stabilize the company’s stock.
A Morgan Stanley poll indicated that 85% of investors view Musk’s political ventures as detrimental to Tesla’s business, highlighting the growing concern over his leadership.
Original Story at www.dw.com