Tesla has lost half of its value in just a few months as Elon Musk pursues his political ambitions, alienating a key segment of the customers who once propelled the company to success.
At the end of 2024, Tesla’s stock hit an all-time high, just in time for the holiday season. Since then, it has plummeted from $480 to $240 per share, a staggering 50% drop. A 15% decline in a single session last Monday underscored that this is not merely a market correction or temporary fluctuation – it is the materialization of the political risk Musk has deliberately accumulated over the past two years.
Musk, with all his strengths and flaws, is an exceptional case study. But even more remarkable is how Tesla, once an aspirational brand, has transformed into a cultural lightning rod, alienating a portion of its original customer base, as noted by The Verge.
Tesla’s Foundation and the Shift in Perception
Tesla built its empire on three key pillars:
- Technological innovation
- Environmental sustainability
- A techno-optimistic vision of the future
It was the ideal car – both figuratively and literally – for affluent progressive consumers who wanted to showcase not just financial power, but also forward-thinking values.
However, Musk’s political shift has created an unbearable cognitive dissonance for many of these original supporters.
The Ideological Divide in Numbers
This ideological fracture is evident in sales figures. In California, a historically progressive stronghold and Tesla’s most crucial market, Model 3 sales plummeted in 2024. In Europe, the decline was even steeper, though multiple factors played a role, including increased competition from Chinese EV manufacturers.
In some cases, Tesla’s declining sales resemble a brand exodus rather than a typical sector-wide downturn. Even in Europe, where Tesla struggled, EV sales still grew by 34%, indicating that demand for electric vehicles remains strong.
The Rise of “Ashamed Tesla Owners”
One of the most visible signs of Tesla’s brand crisis is the emergence of embarrassed owners. Some have added apology stickers to their vehicles (“I bought it before Elon went off the rails”), while others have replaced the Tesla logo with generic badges to dissociate their car from its controversial CEO.
In some extreme cases, a backlash has escalated to vandalism, with Tesla dealerships being shot at in Oregon, Molotov cocktails thrown at facilities in Colorado, and Cybertrucks set on fire in Seattle. Tesla has, undeniably, become an ideological flashpoint.
Competition Capitalizing on Tesla’s Vulnerability
Meanwhile, Tesla’s competitors are seizing the opportunity. Hyundai, Kia, GM, and Honda (not to mention Chinese brands like BYD and Omoda) have rolled out electric alternatives that, while perhaps less flashy than Tesla, offer attractive features at more affordable prices.
Musk’s Political Agenda vs. Business Priorities
Musk’s focus on politics and his alignment with Donald Trump have overshadowed his business vision. Tesla is in urgent need of a more affordable model – the long-promised $25,000 car – to compete with budget-friendly Chinese EVs. However, Musk seems more preoccupied with humanoid robots and the elusive promise of robotaxis, while Waymo has already deployed real fleets of autonomous taxis.
Tesla’s Technical Credibility Takes a Hit
Tesla’s technical credibility has also taken a blow. The company had long claimed that every car manufactured since 2016 contained the necessary hardware for full self-driving capabilities. That turned out to be untrue. Musk later admitted that onboard computers would need to be replaced, a process he described as “painful.” Now, Tesla faces class-action lawsuits over misleading advertising.
The Financial Fallout: A Self-Inflicted Crisis
Tesla remains a dominant force in the EV industry, but something has fundamentally changed. Trump may turn the White House into a Tesla showroom and post glowing endorsements of Musk on his social media platform, but he cannot reverse financial reality.
The destruction of shareholder value has been catastrophic: $800 billion in market capitalization and $100 billion of Musk’s wealth have vanished in less than six months. Even longtime Musk loyalists, such as Tesla board chair Robyn Denholm and James Murdoch (son of Rupert Murdoch), have sold off large amounts of stock.
Can Tesla Regain Its Former Glory?
Fires happen in every business, but Tesla’s current crisis is self-inflicted. The company has a strong cash position and economies of scale, so its survival isn’t in question. However, whether Tesla can reclaim its former status as a visionary enterprise is another matter entirely.
The fundamental question is whether Tesla can reconcile its original mission – accelerating the global transition to sustainable energy – with Musk’s increasingly divisive political ambitions. Ironically, Tesla’s biggest obstacle to that mission might be its founder.