Elon Musk is not only dealing with criticism from liberals and government workers but is also losing the trust of Tesla investors as the company’s stock price plunges.
Tesla’s stock had a strong boost, rising 84% after the election and peaking just before Christmas. Many investors expected Musk and his company to benefit from Donald Trump’s second term as president. Musk was Trump’s biggest financial supporter during the campaign, and he became one of the most prominent figures in Trump’s administration, leading efforts to cut government spending and lay off thousands of federal workers.
But now, Tesla’s stock has dropped 40% from its peak, losing more than a third of its value since Trump took office. This means Tesla has given up 87% of its post-election gains.
A big part of the stock drop seems to be due to Musk’s increased visibility and role in the Trump administration. Many investors likely thought Musk would play a more background role in politics, rather than being directly involved in controversial policies. After all, Musk has a lot of other businesses to manage, from Tesla to SpaceX to Neuralink to X.
However, as noted by CNN, the drop in Tesla’s stock isn’t just about Musk’s political involvement. The company is also facing major competition, particularly from Chinese automakers, who have been making strides in both their local market and Europe.
Tesla’s sales have also been struggling. In Europe, while electric vehicle sales increased by 34% in January, Tesla’s sales dropped 50%. In China, Tesla saw a 29% drop in sales during the first two months of the year. And in the U.S., sales fell by 16% between December and January, according to Reuters.
Some of this drop could be seasonal, as Tesla typically pushes hard for year-end sales, followed by a slow period in January. But even with that in mind, it’s clear Tesla is facing some tough challenges.
“Globally his sales are imploding,” said Gordon Johnson, an analyst who is critical of Tesla. “The sales drop in China is about competition, but in Western countries, people are angry with him. Whether that’s affecting sales or it’s the competition, it’s clear there’s little he can do to fix it.”
Some investors are starting to lose faith in Tesla’s growth this year. “I think investors are adjusting their expectations for deliveries,” said Gene Munster, managing partner at Deepwater Asset Management. “A few months ago, Musk said he expected 20-30% delivery growth for 2025. But now, he hasn’t mentioned that target, and analysts assume it’s off the table.”
One key factor in the stock drop is likely Musk’s high-profile role in politics. Munster, who is still a Tesla supporter, believes about 75% of the current decline is due to the backlash against Musk’s visibility in the Trump administration.
“Back when the election happened, no one knew how involved Musk would be in the Trump administration,” Munster explained. “Now, Tesla investors are seeing Musk as more powerful than Trump, which has hurt Tesla’s brand.”
There have even been protests outside Tesla stores, with reports of vandalized vehicles. In one case, a person was arrested for vandalism and possession of incendiary devices at a Tesla store in Colorado.
Data from S&P Global Mobility shows a shift in how people feel about owning a Tesla. The loyalty rate for repeat Tesla buyers dropped in “blue states” (states that voted for the Democratic candidate) from 72% at the end of 2023 to 65% at the end of 2024. In “red states” (Republican-voting states), the loyalty rate barely changed. This decline in loyalty in blue states, like California, has caused Tesla to lose some market share.
A recent Morning Consult poll found that nearly 32% of U.S. buyers would not consider buying a Tesla, up from 27% last year and just 17% in 2021.
There has also been a rise in negative sentiment on social media, with some people even voicing support for vandalism against Teslas and accidents involving Tesla stores.
Musk’s political involvement isn’t the only issue affecting Tesla. His many other ventures, including SpaceX, X, Neuralink, and his role in the Trump administration, may be distracting him from running Tesla.
“I think there are natural limitations to what he can do,” Munster said, referring to Musk’s many responsibilities.
Additionally, rising tensions between the U.S. and China could affect Tesla, especially given Musk’s close relationship with Trump. Some analysts worry that China could take action against Tesla because of Musk’s political ties.
Despite these challenges, some Tesla supporters still believe in the company’s future, particularly its potential to develop self-driving “robotaxis.” While Tesla’s current “Full Self Driving” feature requires drivers to remain ready to take control, Musk has promised fully autonomous vehicles by June, and plans for a ride-hailing service in Austin, Texas, later this year.
However, many remain skeptical. Johnson, the analyst who is critical of Tesla, points out that Musk has been promising fully autonomous vehicles for years, and if he fails to deliver again, Tesla’s stock could take a sharp hit.
As it stands, investors are watching closely to see how Tesla handles its sales struggles and whether Musk’s political involvement will continue to hurt the company’s reputation.
