Elon Musk’s political involvement is raising concerns among Tesla (NASDAQ:TSLA) investors, who worry about its impact on the company’s financial performance. As Musk manages multiple ventures, including SpaceX and xAI, his expanding political role as head of the Department of Government Efficiency (DOGE) has triggered a backlash from both investors and consumers. Some shareholders are now calling for Musk to either dedicate more attention to Tesla or appoint a new CEO. The controversy surrounding his leadership has coincided with a decline in Tesla’s stock price and EV sales, prompting discussions about the company’s future direction.
When Musk acquired Twitter, later rebranded as X, Tesla’s investors voiced similar frustrations, urging him to refocus on the automaker. At the time, he eventually stepped down as X’s CEO in response to growing investor pressure. However, his current political engagements appear to be having a more pronounced effect on Tesla’s brand perception. The declining sales and stock performance have reignited concerns about his divided attention and its consequences for the company’s stability.
How is Musk’s political role affecting Tesla?
Musk’s leadership of DOGE, which has implemented significant budget cuts and workforce reductions, has led to protests targeting Tesla. Some consumers see the company’s association with Musk as a political statement, driving negative sentiment toward the brand. Tesla vehicle registrations in the U.S. fell by 11% in January compared to the previous year, according to S&P Global Mobility. Additionally, Tesla’s stock price has dropped by nearly 50% since its December high following Donald Trump’s election victory.
Are investors losing confidence in Tesla’s future?
Some major Tesla investors believe that Musk’s involvement in politics has weakened the company’s reputation and financial performance.
“The company’s reputation has just been destroyed by Elon Musk,”
said Ross Gerber, a wealth manager and Tesla shareholder. He argued that Musk should either find a new CEO for Tesla or step away from politics to prevent further damage. Christopher Tsai, another Tesla investor, echoed this view, expressing hope that Musk’s political role would be short-lived.
Concerns extend beyond investors, as some Tesla owners now view their vehicles as symbols of Musk’s political stance. Senator Mark Kelly, a Democrat from Arizona, announced he was selling his Tesla, stating,
“Every time I drive it, I feel like a rolling billboard for a man dismantling our government and hurting people.”
This sentiment has contributed to declining demand for Tesla’s vehicles, particularly in key markets.
Industry analysts have also noted Musk’s absence from Tesla’s operations in recent months. Dan Ives, an analyst at Wedbush Securities, observed that Musk had not been seen at Tesla factories for weeks, leading to growing concerns among shareholders.
“If Musk’s focus remains on DOGE, then brand damage will become more pervasive,”
he warned. Investors are closely watching to see whether Musk will address these concerns or continue prioritizing his political role.
Tesla’s situation highlights the difficulties companies face when their CEOs engage in highly public political activities. While Musk has a history of balancing multiple ventures, the scale of his political involvement appears to be impacting Tesla more significantly than previous distractions. The company must now navigate declining sales, investor dissatisfaction, and potential long-term brand damage. Whether Musk chooses to step back from politics or appoint a new Tesla CEO could determine the automaker’s trajectory in the coming months. Investors and analysts will continue to assess how his leadership decisions influence Tesla’s market position.
