Tesla caught in political crossfire: Musk's Trump dilemma
Elon Musk's Tesla Corporation finds itself in a difficult situation: continued close collaboration between the billionaire and President Donald Trump may deter buyers who oppose the American leader’s policies, while distancing himself from Trump could provoke repercussions from the White House, notes CNN.
What do you need to know?
- Tesla is facing challenges related to US tariff policies. The trade conflict initiated by Donald Trump puts the company in a tough position, even though Tesla is less affected by tariffs than other manufacturers.
- Tesla’s sales fell by 13 percent in the first quarter of 2025. This is the largest drop in the company’s history, impacting the stock value, which has decreased by 44 percent since the start of the year.
Due to the trade issues initiated by Trump, Tesla, like other companies, finds itself in a challenging situation. However, what sets it apart is Musk’s close relationship with the American president.
According to CNN, further cooperation between Musk and Trump might alienate potential customers in both the country and abroad who disagree with Trump’s policies. However, if the billionaire distances himself from Trump, he risks facing the White House’s disfavor. CNN notes that this is a trap Musk has created for himself.
On Tuesday evening Eastern Time, Musk's company is scheduled to release its sales results for the first quarter of 2025. The billionaire will also address investors' questions.
Tesla has problems
The car manufacturer is facing a decline in sales and tarnishing of the brand's image. The "Wall Street Journal" reported that in the first quarter of 2025, Tesla's global car sales fell by 13 percent compared to the same period the previous year. According to media reports, this was the biggest decline in the company’s history. Until recently, Tesla experienced year-over-year sales growth ranging from 20 percent to 100 percent nearly every quarter, which significantly boosted the corporation's stock price.
The market value of Tesla has also decreased. After the presidential elections, stock prices increased as investors hoped that Musk's close ties with Trump would lead to favourable policies for the company. However, since the beginning of the year, the stocks have lost 44 percent of their value.
Tesla is less vulnerable to tariffs compared to other US car manufacturers since it does not import vehicles from its foreign factories and uses fewer foreign parts for car production in the US, CNN notes. According to Reuters, after the US announced tariffs on China, and in response to China's retaliatory tariffs, Tesla halted a portion of its imports from China. Tesla has also stopped accepting new orders in China for Model S and X vehicles built in California.
Reuters also reported that Tesla is delaying the introduction of its long-awaited cheaper car model to the market until 2026. It was previously announced that the corporation would begin vehicle production in the first half of this year. The car is expected to cost approximately $30,000 (41,000 CAD). This delay may concern investors. On Monday, stocks lost 6 percent of their value following reports of the production delay of the cheaper model.
However, as assessed by CNN, the company's financial situation is only one of the topics of interest to them.
Besides wanting to know what Musk thinks about the 25-percent tariffs on cars announced by Trump and how much it costs Tesla, investors also want to see progress in the production of autonomous Robotaxi cars and learn details about plans to sell humanoid robots. They may also be interested in when Musk plans to resign from the Department of Government Efficiency (DOGE) and start focusing on solving the company’s problems. DOGE is a government institution led by Musk, designed to reduce federal administration expenses.
Protests against Tesla
At the beginning of the year, due to Musk’s political involvement and the impact on job cuts in the administration, a campaign called Tesla Takedown emerged. Protests are being organized in front of Tesla showrooms in the US and abroad. The protesters hope their actions will lead to a decline in car sales produced by Musk’s company. Musk's support for far-right parties in Europe also influences the protests and boycotts.
Some participants in the campaign committed acts of vandalism, setting Tesla cars on fire, which US Attorney General Pam Bondi condemned as acts of domestic terrorism. Musk expressed astonishment at the attacks and called on the vandals to stop behaving in a manner he described as psychopathic.
In March, Trump and Musk viewed five Tesla car models together, after which Trump announced he would buy a red Model S. He also mentioned that he had already purchased a Cybertruck model for his granddaughter Kai last year. The president, who had previously often criticized electric cars, praised the cars from Musk's company, emphasizing that the presentation of the cars is a show of support for his advisor’s activities amid Musk’s criticism and the company’s challenges.
