Elon Musk’s role in the Trump administration is complicating his business ventures, as the tech billionaire pushes forward with efforts to slash the federal government and budget in the face of mounting criticism.
Tesla’s stock has plummeted more than 50 percent since late last year, while demonstrations are popping up at the electric vehicle company’s outlets across the country in protest of President Trump’s so-called Department of Government Efficiency (DOGE).
Musk has also faced backlash, especially in Europe, for his criticism of the Ukrainian government and support for far-right political parties on the continent.
The Tesla CEO admitted on Monday he is having “great difficulty” running his various companies while juggling the work of DOGE and called the backlash a “tough setting.”
As he spends more time in Washington with a focus on DOGE, investors are taking note while critics are taking out their frustrations on his companies.
“The DOGE efforts have now intertwined Tesla into a brewing political firestorm,” Wedbush Securities analysts wrote in an investor note on Tuesday.
“We believe this is a ‘moment of truth’ for Musk and Tesla…if Musk continues to head down the DOGE path 110 percent and showing no attention to Tesla during this turbulent time, then brand damage will become more pervasive,” the note continued.
The criticism over DOGE for its mass layoffs and spending cuts is making Tesla a target of some of the same groups that once backed Musk’s electric vehicle push for the environment.
“Musk is synonymous with Tesla and Tesla is synonymous with Musk,” Wedbush Securities analyst Dan Ives told The Hill, adding, “The brand issues are the bigger worry.”
Tesla’s stock tumbled 15 percent on Monday, the lowest the company’s shares have been since October and the largest drop since September 2020. Musk brushed off the numbers, writing on X that it “will be fine long-term.”
Trump doubled down on his support of Musk on Tuesday and bought a Tesla outside the White House alongside the tech billionaire to “make a statement.”
“I’m gonna buy because number one, it’s a great product. As good as it gets. Number two, because this man [Elon Musk] has devoted his energy and his life to doing this, and I think he has been treated unfairly,” Trump told reporters as he stood next to various Tesla models.
In recent weeks, protestors have targeted various Tesla showrooms or vandalized the company’s vehicles on the street. Meanwhile, some Tesla owners are placing bumper stickers on their vehicles with messages like “I bought it before Elon went nuts.”
In Colorado, a protestor was arrested last month for allegedly spray-painting “Nazi” under the Tesla sign and igniting Molotov cocktails.
Trump said he would be open to labeling the violence against Tesla dealerships as domestic terrorism.
He claimed online that “Radical Left Lunatics” are “trying to illegally and collusively boycott Tesla.” It is not illegal to boycott companies, and courts have ruled the action often falls under the protection of the First Amendment.
The anger against Musk has spread across international borders, notably in Germany, where Tesla sales fell by 76 percent last month. It came after Musk’s support of the far-right political party Alternative for Germany (AfD).
Sales were also down by considerable margins in Italy, Portugal, Norway and Denmark, Reuters reported.
Ives called the moment a “tipping point” for Tesla performance. Should Musk devote more time into the electric vehicle company, he predicted the slump will become “just a mini nightmare for investors.”
But if Musk continues to focus on DOGE at the expense of his other companies, Ives suggested there could be “almost grand damages that cannot be repaired.”
Musk’s leadership at Tesla, along with his aerospace company SpaceX and social media platform X, has been known to be intense and aggressive at times. He claimed he used to sleep on the factory floors of Tesla to maximize work.
Now, some of that intensity is shifting to the White House and the work at DOGE. WIRED reported in January that he is sleeping in DOGE’s office in the Eisenhower Executive Building.
When asked by FOX Business Network host Larry Kudlow how he is running his other businesses while helping the president, Musk said, “With great difficulty,” followed by a pause and a sigh.
Up until the past year, Musk largely stayed out of politics while becoming a dominant force in the technology industry. Now, investors are weighing his new dual roles.
“One thing I am sure of is that politics and selling products just does not mix,” Ross Gerber, the co-founder and CEO of Gerber Kawaski Wealth and Investment Management and longtime Tesla investor, told Yahoo Finance last month when asked about Musk’s DOGE work.
“The truth is people identify with their vehicles and people don’t want to identify with Elon Musk,” Gerber said.
Calling Tesla a “great company,” Gerber suggested it needs new leadership.
Michael Cornfield, a political scientist and senior fellow at The George Washington University, said he would not be surprised if a group of shareholders put forward a resolution asking for clarity and for Musk to remove himself as the public face of Tesla.
Musk’s scaling back of authority would be notable given his history of heavy involvement with his companies.
“[Tesla’s] got a nickname now: the ‘Swasticar.’ I think people are concerned about Elon Musk’s unprecedented consolidation of power are not going to buy more Teslas,” Cornfield said. “It’s a political reaction first and a market reaction second.”
Tesla did not immediately respond to The Hill’s request for comment.
Other analysts say it is too early to confirm any of the long-term impacts between Musk’s political involvement and Tesla’s performance.
“I think it’s certainly fair to say there’s increased risk that Elon Musk’s political activities will turn consumers away from Tesla, and that didn’t previously exist,” Morningstar analyst Seth Goldstein told The Hill. “There’s also increased competition and there’s true long range EV competition at comparable price points at Tesla.”
Consumers typically look to other factors like lifestyle, durability and longevity of an item, Goldstein said, but noted “it doesn’t mean that cars are immune from political opinions.”
Tesla is a very high growth stock, Goldstein added, meaning the share price typically reacts to how the market feels about the company’s growth prospects.
“It looks like some of the growth may be slower than the market thought,” Goldstein said. “We’ve seen the shares fall over 50 percent, so I expect Tesla stock to continue to be one of the more volatile stocks in the market.”
