Tesla has been one of the most traded stocks so far this year, perhaps for all the wrong reasons.
As of the time of writing this article, the company’s share price has dropped by 42% year-to-date.
Tesla’s shareholders have been loyal.
They have been through a lot of ups and downs.
But now, they are questioning whether Musk’s political involvement is hurting the company’s performance.
This story isn’t just about a bad quarter or a marketing misstep.
Something deeper is going on.
Something inside Tesla’s boardrooms, across its balance sheets, and, perhaps most importantly, within the mind of its distracted CEO.
Has Tesla lost its edge?
For years, Tesla led the electric vehicle race. Now, it’s lagging.
Sales figures from early 2025 are painting an increasingly troubling picture.
In Germany, Tesla’s registrations plunged 76% in February compared to the previous year, even as overall EV sales surged.
The story is similar in France, Sweden, and Australia.
In California, which is Tesla’s largest US market, the company posted its fifth consecutive quarter of declining sales.
Tesla’s product line is part of the problem.
Its 2012 Model S and the 2017 Model 3 are aging, while competitors flood the market with fresh, compelling EV options.
Only the Model Y retains real momentum, still holding the title of the world’s best-selling car in 2024.
The Cybertruck, despite the initial hype, remains polarizing and its sales impact is still unclear.
Beyond product cycles, the brand itself is under strain.
Tesla is no longer just selling cars, but also selling the public perception of Elon Musk. And lately, that’s become a much harder pitch.
Is Musk’s politics derailing Tesla’s brand?
Elon Musk’s shift from tech visionary to political insider is now a central concern for Tesla’s future.
As head of the Department of Government Efficiency (DOGE) in President Trump’s administration, Musk has become one of the most polarizing figures in American public life.
His alignment with Trump, as well as far-right parties in Europe, has ignited a backlash among Tesla’s once-loyal customer base.
Tesla was built on progressive ideals such as climate activism, clean energy, and innovation.
Now, Tesla owners prefer to distance themselves from the brand.
Protest stickers saying “I bought this before Elon went crazy” have become a common sight on Teslas across Berlin and San Francisco.
Consumer boycotts, arson attacks on Cybertrucks, and vandalized charging stations show how politically charged the brand has become.
As a result, the company has seen its first annual sales decline in over a decade.
In 2024, Tesla’s global sales dropped 1.1%, and signs point to a sharper decline in 2025.
Even Tesla’s resale market is feeling the pinch, with owners trying to offload their cars amidst falling used EV prices.
Nonetheless, Musk seems unphased. Some say he is betting to pivot Tesla’s appeal toward conservative buyers.
But that strategy comes with a fundamental flaw.
Data shows that many Trump supporters remain skeptical of EVs altogether.
Musk may have alienated his traditional base without capturing a new one.
How fragile is investor confidence?
Tesla’s stock has been on a downward spiral. At one point during March, it had erased nearly $900 billion in market capitalization.
Elon Musk has seen his wealth shrink by $144 billion in three months, although he still remains as the world’s richest man.
But now, it’s not just retail investors feeling the pain. Key institutional investors are beginning to revolt. Ross Gerber, a long-time Tesla bull, publicly called for Musk to step down as CEO, saying:
He’s not running Tesla. […] That’s where I’m going to say it. I think Tesla needs a new CEO, and I decided today I was going to start saying that. Come back to Tesla and be the CEO of Tesla or focus on the government and keep doing what he’s doing, but find a suitable CEO for Tesla.
Another major investor, Christopher Tsai, echoed this view, urging Musk to end his political role and return focus to Tesla.
Behind the scenes, others are voting with their wallets.
SEC filings reveal over $100 million in stock sales by institutional investors, a quiet but telling signal of eroding confidence.
Even Tesla’s supporters on Wall Street are wavering.
A Morgan Stanley survey found that 85% of investors believe Musk’s political involvement has had a “negative or extremely negative” impact on Tesla’s business.
What’s going on with Tesla’s finances?
Beyond the headlines, the numbers are raising serious questions.
A recent Financial Times investigation highlighted a $1.4 billion discrepancy in Tesla’s 2024 financials.
Specifically, Tesla reported $6.3 billion in capital expenditure in the second half of 2024, yet the value of its assets only increased by $4.9 billion.
That’s a big gap, and Tesla has yet to explain it. No significant asset sales or impairments were disclosed, and foreign exchange fluctuations are unlikely to account for it, especially given that 80% of Tesla’s assets are US-based.
Historically, Tesla’s reported asset growth has tracked closely with its capex spending.
This sudden divergence is unusual and may signal weak internal controls or aggressive accounting tactics, such as misclassifying expenses to inflate profits.
At the same time, Tesla raised $6 billion in new debt in 2024, despite sitting on $37 billion in cash and not paying dividends or buying back shares.
This pattern of strong operating cash flow coupled with aggressive capital raising, is another red flag.
Forensic accounting experts note that such mismatches often preceded major corporate failures, including Wirecard and NMC Health.
Tesla insists it’s preparing for large investments in AI, robotics, and battery tech.
But with rising inventories and financial anomalies stacking up, questions about where the money is going are becoming harder to ignore.
Is Musk still in control?
Musk’s expanding empire is also feeling the heat. Throughout March, a SpaceX rocket exploded, and a cyberattack took down X, although service was quickly restored.
These are distractions Musk can’t afford as Tesla’s core business falters.
While Musk insists he’s managing his companies “with great difficulty,” investor patience is wearing thin.
There are growing fears that his interconnected business holdings, that is Tesla, SpaceX, X, xAI, are all at risk if Tesla’s stock continues to decline.
While Tesla stock is no longer direct collateral for Musk’s X acquisition, analysts warn that a prolonged drop could force asset sales or weaken his control over X due to liquidity pressures.
Meanwhile, Musk’s political ties complicate matters further.
Tesla holds up to $22 billion in US government contracts, and Musk’s dual role as a top advisor to Trump is raising conflict-of-interest concerns, especially as federal job cuts under DOGE spark lawsuits and public backlash.
Can Musk course-correct?
For the first time in years, Elon Musk seems cornered.
The vision that once made Tesla untouchable now faces its most serious test. It’s not just about sales.
Or stock price. It’s about trust. Trust among customers, investors, and even within Musk’s own boardroom.
Whether he steps back from politics or doubles down, the consequences will reverberate far beyond Tesla.
One thing is certain: the days of Musk being able to do it all, unchecked and unchallenged, may be coming to an end.
Tesla’s investors and customers want one thing. That is leadership.
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