Tesla’s stock plummeted 15% on Monday, marking its worst single-day decline since September 2020, as a combination of political controversy surrounding CEO Elon Musk, a deteriorating brand image, and broader market fears continued to weigh on investor sentiment.
The electric vehicle giant has now suffered through seven consecutive weeks of losses, its longest losing streak since going public on the Nasdaq in 2010.
Since peaking at $479.86 on December 17, 2024, Tesla shares have lost more than 50% of their value, wiping out over $800 billion in market capitalization. Monday’s dramatic selloff represented the seventh worst trading day in Tesla’s history.
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The stock’s collapse mirrored a broader downturn in tech-heavy equities, with the Nasdaq Composite tumbling nearly 4%, its sharpest single-day decline since 2022. But Tesla’s decline stood out, as investors increasingly viewed the company’s problems as self-inflicted, largely stemming from Musk’s erratic political entanglements and shifting brand perception.
Trade War Concerns and Trump’s Tariff Plans Send Ripples Through Tesla
Tesla’s sharp decline came amid heightened concerns over President Donald Trump’s proposed tariff increases on Canada and Mexico, two of the most important markets for automotive suppliers. Investors are growing uneasy about the potential for a full-fledged trade war, which could significantly disrupt Tesla’s supply chain and force the company to raise prices.
As an automaker that depends on battery components from China, Tesla is also vulnerable to any escalation in U.S.-China trade tensions, especially given Trump’s history of imposing steep tariffs on Chinese goods. Higher import duties could not only increase Tesla’s production costs but also make its vehicles less competitive in global markets, further dampening demand.
Tesla’s stock, which has long been propped up by investors’ faith in Musk’s vision, now faces a more skeptical Wall Street. As analyst Dan Ives of Wedbush Securities noted in a report, investors are beginning to question whether Musk’s political distractions have left Tesla without a clear strategic direction.
“A pivotal moment for Musk and Tesla.. autonomous, FSD, new cheaper EV models all coming on the horizon to drive demand…but this Musk/DOGE political firestorm needs to be contained for the Tesla brand. Investors need to see Musk lead Tesla at this key moment…the time has come,” he said.
Musk’s Political Rhetoric Pushes Tesla Toward a Branding Crisis
Beyond trade policy concerns, Tesla is grappling with an identity crisis, as Musk’s controversial political persona increasingly alienates traditional buyers. Since taking a leading role in the Trump administration’s Department of Government Efficiency, Musk has repeatedly used his platform to attack judges, amplify far-right conspiracy theories, and promote Kremlin-aligned narratives about Ukraine, drawing widespread condemnation.
Many former Tesla supporters, particularly those who embraced the brand for its climate-friendly innovation, are now distancing themselves due to Musk’s alignment with Trump, whose administration has rolled back environmental regulations and dismissed the urgency of climate change.
Musk’s increasingly combative stance on social media platform X has only worsened matters. His public clashes with critics, journalists, and even his own investors have further alienated key demographics, leading to a noticeable drop in consumer sentiment toward Tesla.
In a research note, Bank of America analysts highlighted that Tesla’s new vehicle sales in Europe plunged by 50% in January compared to the previous year, even as global electric vehicle sales grew by 21%. The sharp decline was attributed to a growing distaste for Musk’s politics, in addition to potential customers delaying purchases while awaiting the next-generation Model Y.
Despite Tesla’s struggles, the Model Y remained the best-selling battery electric vehicle globally in January, followed closely by China’s Geely Geome, which overtook the Model 3 sedan in sales. However, the trend suggests that competitors are steadily eating into Tesla’s market share as once-loyal customers explore alternatives.
Vandalism and Protests Target Tesla Facilities
As Musk leans further into politics, the backlash against Tesla is becoming more tangible. Across the United States and Europe, Tesla facilities have been targeted by protests, vandalism, and even arson attempts, underscoring the deepening divide between Musk and sections of the public.
In Loveland, Colorado, a Tesla service center has been attacked multiple times, with the latest incident occurring on March 7. Authorities have yet to identify the perpetrators, but the pattern of incidents suggests growing hostility toward the brand.
Speaking to CNBC, Ben Kallo, an analyst at Baird, warned that the rise in vandalism incidents could hurt Tesla’s bottom line, as customers may think twice about purchasing a vehicle that could be targeted in politically charged attacks.
“When people are worried that their Tesla might get vandalized or set on fire, even those who were previously indifferent to Musk’s politics might hesitate before buying one,” Kallo explained.
Musk’s Insouciance Isn’t Fading as Investors Prepare to Step In
For months, Musk has brushed off criticism, seemingly unfazed by Tesla’s stock decline and growing brand troubles. His nonchalant attitude has frustrated investors, many of whom have urged him to refocus on Tesla’s core business rather than engaging in politically charged battles.
However, as Tesla’s market cap continues to shrink, the pressure is building for investors to step in and demand changes. Institutional shareholders, including large investment funds and pension funds, have started raising concerns about Musk’s leadership and the direction of the company.
In a sign of growing tensions, Tesla board members have reportedly been in discussions about whether Musk should scale back his involvement in political affairs and devote more attention to stabilizing Tesla’s plummeting stock price. However, Musk has so far given no indication that he plans to change course.
Trump’s Public Show of Support for Tesla
Against the backdrop of Tesla’s stock freefall, President Trump sought to show solidarity with Musk on Tuesday, publicly stating that he planned to purchase a Tesla vehicle to demonstrate his support for the company.
While Trump’s backing could shore up support among conservative consumers, it may further alienate progressive and environmentally conscious buyers, deepening Tesla’s branding crisis. Political polarization has rarely benefited consumer brands, and analysts warn that Musk’s refusal to distance himself from Trump’s administration could ultimately cost Tesla more than it gains.