As a long-time observer of $Tesla Motors(TSLA)$ and its mercurial CEO Elon Musk, I’ve watched the stock’s dizzying highs and lows with fascination. But Monday’s 15% plunge—the worst single-day drop since September 2020—feels different. This isn’t just another volatility blip; it’s the culmination of multiple crises colliding.
1. Musk’s Trump Era Role
Let’s start with the elephant in the room: Elon Musk’s entanglement with the Trump administration. Since Musk took on leadership of the “Department of Government Efficiency” in January 2025, Tesla shares have fallen every single week, shedding 50% of their value since December.
Image
In my view, Musk’s political pivot has alienated a core segment of Tesla’s customer base: progressive, environmentally conscious buyers. His inflammatory posts on X—attacking judges, amplifying Kremlin narratives about Ukraine, and championing austerity policies—have turned Tesla into a culture war lightning rod.
The backlash is tangible. Protests at Tesla facilities, vandalism (like the arson attempts in Colorado), and reports of customers avoiding the brand over Musk’s rhetoric are now directly impacting demand. As Baird analyst Ben Kallo noted, “Even Musk supporters might think twice about buying a Tesla if their car becomes a target.”
This isn’t just about ideology; it’s about business. Tesla’s brand was built on aspirational innovation, not partisan politics. Musk’s alignment with Trump’s agenda has blurred that distinction, and shareholders are paying the price.
2. Tariff Fears and Supply Chain Risks
Monday’s sell-off was turbocharged by fears of Trump’s proposed tariffs, which could reignite trade wars. Tesla relies heavily on cross-border supply chains, particularly with Canada and Mexico, for components like batteries and semiconductors. Tariffs would raise production costs and consumer prices, squeezing margins in an already competitive EV market.
Image
But here’s what worries me more: Tesla’s lack of a clear contingency plan. While rivals like $Ford(F)$ and $General Motors(GM)$ have diversified manufacturing bases, Tesla remains heavily exposed to North American trade dynamics. With Musk distracted by his government role, Tesla seems unprepared for this brewing storm.
3. Brand Erosion and Stalling Innovation
Tesla’s innovation engine is sputtering. The Model Y, while still the world’s top-selling EV, faces intensifying competition. In Europe, Tesla’s January sales fell 50% year-over-year, per Bank of America, as buyers flock to cheaper Chinese rivals like Geely’s Geome. Even the Model 3 lost its second-place global ranking to Geely in January.
Meanwhile, Tesla’s product pipeline feels stagnant. The Cybertruck remains a niche product, and the promised $25,000 “Model 2” has yet to materialize. Customers are delaying purchases in anticipation of a Model Y refresh, but Tesla hasn’t provided a timeline.
In my opinion, Tesla’s biggest problem isn’t Musk’s politics—it’s the perception that the company is no longer the undisputed leader in EV tech. China’s BYD and Geely are closing the gap on affordability and features, while legacy automakers are flooding the market with hybrids.
4. The Market’s Broken Faith
Tesla’s valuation was always premised on growth. But with EV sales growth slowing globally (up just 21% in January, per BofA) and Tesla’s sales declining, investors are questioning the stock’s premium. At its peak, Tesla traded at over 1,000 times earnings; today, even after the crash, its P/E ratio remains lofty compared to automakers.
Monday’s broader Nasdaq sell-off (-4%) amplified Tesla’s pain, but the stock’s 15% drop suggests company-specific rot. Institutional investors are fleeing: Tesla’s weighting in the S&P 500 has halved since 2023, reducing forced buying from index funds.
Is This the Bottom?
TSLA Weekly Chart
While contrarians might see a buying opportunity here, I’m cautious. Tesla faces three critical risks:
-
Musk’s Divided Attention: Can he steer Tesla while overhauling the federal government?
-
Political Brand Damage: Will progressive buyers return if Musk steps back?
-
Execution Risks: Delays in new models and autonomy tech could cede more market share.
That said, Tesla isn’t doomed. Its Supercharger network remains a moat, and energy storage/bot ventures hold promise. But until Musk either re-engages fully with Tesla or hands over the reins, the stock will struggle. Looking at the weekly chart, the price fell significantly below the bottom of the bollinger band, which could indicate a short term bounce.
Final Thoughts
Tesla’s collapse is a cautionary tale about founder-CEOs becoming larger than their companies. Musk’s political ambitions and polarizing persona have overshadowed Tesla’s mission, and shareholders are bearing the brunt. While the EV revolution is far from over, Tesla’s dominance is no longer guaranteed.
For now, I’m staying on the sidelines. Until Tesla addresses its leadership vacuum and reignites innovation, this storm might not be over.
@MillionaireTiger @Tiger_comments @Daily_Discussion @CaptainTiger @TigerSG @TigerEvents
Disclaimer: The views expressed here are my own and do not constitute financial advice. Always conduct your own research before investing.
Comments