Wall Street Turns Against Elon Musk as Tesla Shares Plummet
Elon Musk isn’t just facing backlash from liberals and government employees—Tesla investors are also growing increasingly frustrated.
Tesla’s Stock Woes
Following election day, Tesla’s stock soared 91%, peaking just before Christmas as investors anticipated that Musk and his company would thrive under Donald Trump’s second term. Musk, Trump’s largest financial backer during the campaign, has since taken a prominent role in the administration as the head of the Department of Government Efficiency (DOGE), where he has been aggressively cutting government spending and laying off thousands of federal workers.
However, Tesla shares tumbled 5.6% on Thursday, marking a 45% drop from their December peak—effectively wiping out 96% of the post-election rally. Since Trump took office and Musk assumed his new political role, Tesla’s stock has lost 38% of its overall value.
The sharp decline likely reflects concerns over Musk’s heightened visibility in the Trump administration. Initially, investors may have expected him to act as a behind-the-scenes adviser rather than a key figure driving controversial policies. With Musk already overseeing multiple ventures—Tesla, SpaceX, Neuralink, and X (formerly Twitter)—many assumed his government involvement would be limited.
Beyond Musk’s political entanglements, Tesla faces increasing competition, particularly from Chinese automakers making significant gains in both China and Europe.
Tesla’s Sales Are Declining
Tesla’s stock slump mirrors its struggles in the global EV market. Despite an overall 34% increase in electric vehicle sales in Europe this January, Tesla sales plunged 50%. In China, its second-largest market, Tesla sales fell 29% over the first two months of 2025.
In the U.S., Tesla sales dropped 16% from December to January, according to Cox Automotive. While seasonal fluctuations are typical—Tesla historically pushes for year-end sales—this year’s numbers suggest deeper issues.
“Globally, Tesla’s sales are imploding,” said Gordon Johnson, a Tesla critic and analyst. “In China, it’s about competition. In Western countries, people are angry at Musk. Whether sales are declining due to politics or competition, it doesn’t matter—Tesla is struggling, and there’s little Musk can do to reverse it.”
Even bullish investors are revising their expectations.
“I think investors are adjusting their expectations for Tesla’s delivery growth,” said Gene Munster, managing partner at Deepwater Asset Management. “Musk initially projected 20–30% growth for 2025, but last month, he made no mention of that target—signaling that it’s likely off the table.”
Musk’s Political Controversy Impacts Tesla’s Brand
Musk’s alignment with Trump is proving to be a double-edged sword. Protests erupted outside Tesla stores across the U.S. last Saturday, with reports of vandalized Teslas. In Loveland, Colorado, one individual was arrested on federal charges for previous vandalism against a Tesla store and possession of incendiary devices.
Polling data also suggests Tesla’s brand is suffering. According to a Morning Consult survey, nearly 32% of U.S. buyers say they “would not consider” purchasing a Tesla—up from 27% a year ago and just 17% in 2021.
Tesla’s customer loyalty is also slipping in Democratic-leaning states. Data from S&P Global Mobility shows that in traditionally “blue” states—where Democrats have won the last four presidential elections—Tesla’s repeat customer rate fell from 72% in Q4 2023 to 65% in Q4 2024. Meanwhile, loyalty in Republican-leaning states rose slightly from 47.6% to 48.2%.
Anecdotal backlash is visible on social media, with viral videos showing Cybertrucks getting booed during the Mardi Gras parade in New Orleans and requiring police escorts. Some users have even voiced approval for Tesla vandalism and accidents involving Tesla vehicles or stores.
Concerns About Musk’s Distractions and U.S.-China Relations
Investors also worry that Musk’s role in the Trump administration is diverting his focus from Tesla.
“Musk rewrote the rulebook on multitasking as a CEO,” Munster said, referring to his leadership roles at Tesla, SpaceX, Neuralink, and X. “But there are natural limits to what one person can handle, and he has a lot on his plate.”
Additionally, Musk’s ties to the Trump administration may put Tesla at risk in China.
“Beijing controls market access and can withhold favors,” said Isaac Stone Fish, CEO of Strategy Risks. “They have many levers over Elon Musk and Tesla.”
Can Robotaxis Save Tesla?
Despite Tesla’s current struggles, some investors remain hopeful, particularly regarding Musk’s promise of fully autonomous “robotaxis.”
Currently, Tesla’s “Full Self-Driving” (FSD) mode requires drivers to remain behind the wheel. However, Musk has vowed that by June, Tesla will launch a driverless ride-hailing service in Austin, Texas, and introduce a new “Cybercab” by next year—without steering wheels, brake pedals, or accelerators.
Tesla bulls believe that Musk’s close ties to Trump could help him secure regulatory approvals for autonomous vehicles.
“The real unlock for Tesla’s value is autonomy,” Munster said. “Trump loves Musk, and Musk will get some of what he wants—including more opportunities to prove the safety of robotaxis.”
Skeptics, however, argue that Musk has been making similar promises for over a decade. Analyst Gordon Johnson believes Tesla’s stock will face another sharp decline if first-quarter sales—set to be released in April—fail to impress.
