Tesla’s stock experienced a significant decline in March, mirroring the company’s performance in February, with a steep drop of 28%, marking its worst performance since December 2022. This follows a tumultuous period for the electric vehicle giant, with its CEO Elon Musk’s political and business ventures seemingly taking a toll.
In Musk’s first full month as part of President Donald Trump’s White House, Tesla’s shares fell sharply, and the company’s market cap dropped to approximately $915 billion. The slide continued into March, following Musk’s bold claims on social media that Tesla could see a “1000% gain in 5 years with outstanding execution.” Despite these proclamations, Tesla has faced growing concerns due to the broader impact of Musk’s ventures, both political and business-related.
Tesla’s Financial Struggles and Rising Costs
Tesla’s quarterly earnings report showed a decline in automotive revenue by 8% from the previous year, with a 23% drop in operating income. Factors like reduced average selling prices for Tesla’s Model 3, Model Y, Model S, and Model X contributed to these numbers. Furthermore, new tariffs imposed by Trump on goods from Canada and Mexico, which include key suppliers to Tesla, are expected to add pressure on the company’s operations.
Musk’s personal involvement in the White House and his management of the Department of Government Efficiency (DOGE) also raised concerns. As Musk leads the DOGE, overseeing the slashing of the U.S. federal workforce, reducing federal spending, and pursuing government contracts for his other companies like SpaceX and xAI, questions about his focus on Tesla arise. His increasing involvement in controversial political matters has sparked backlash, especially in Europe, where anti-Musk sentiment has surged.
Backlash Against Musk in Europe and Growing Consumer Discontent
The backlash has manifested in protests and vandalism targeting Tesla vehicles, especially in markets like France and Germany. A viral ad in London has dubbed Tesla vehicles “Swasticars,” linking the company to controversial far-right movements. The growing movement, Tesla Takedown, urges consumers to divest from Tesla and stop purchasing its products. This adds to the mounting pressure Tesla faces from consumers and investors alike.
While Musk continues to tout Tesla’s advancements in self-driving cars and humanoid robotics, Tesla faces stiff competition. Rivals like Waymo, Alphabet’s autonomous vehicle company, are far ahead, already providing hundreds of thousands of trips with their robotaxi services across major U.S. cities. Tesla’s own autonomous vehicle service, CyberCab, remains in the developmental stage, and Musk’s promises of unsupervised Full Self-Driving technology by June have yet to materialize.
What The Author Thinks
The mounting distractions caused by Musk’s political involvements and public stances outside of Tesla are undoubtedly affecting the company’s market performance. As Tesla faces growing competition and struggles to meet its lofty autonomous vehicle goals, Musk’s distractions could harm consumer trust and investor confidence in the long run. The growing backlash in Europe and other regions further emphasizes the need for Musk to refocus on improving Tesla’s products and staying clear of controversial political movements.
Featured image credit: Roboflow Universe
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