^{Photo: The White House}

A Crisis at Tesla Worsens Amid Political Warfare

Tesla is no stranger to controversy, but its current situation is unprecedented. Already facing serious financial and operational challenges, the company now finds itself at the center of a high-profile feud between its CEO Elon Musk and former U.S. President Donald Trump. The dispute, which began over a congressional spending bill, has escalated into a political firestorm with far-reaching implications for Tesla’s business and brand.

$152 Billion Wiped Out in a Single Day

Tesla's stock plummeted 14% on Thursday — its worst day in history — erasing a staggering $152 billion in market capitalization. That single-day loss is the largest since the company went public in 2010. Meanwhile, Musk’s personal fortune took a massive hit, dropping by $34 billion, according to Bloomberg’s Billionaires Index. Tesla also fell below the $1 trillion market cap threshold, a psychological blow for a company once considered an unstoppable force in the EV market.

From Policy Dispute to Public Feud

Musk’s 130-day stint as a "special government employee" in the Trump administration ended in May. Before leaving, he blasted Trump’s hallmark spending package as a “fiscal abomination” and called on his followers to “kill the bill” on social media platform X. Trump responded by labeling Musk as “CRAZY,” and hinted at terminating government contracts and subsidies tied to Musk’s companies. Musk replied, “Go ahead, make my day.”

White House officials told NBC News that Trump has no intention of resolving the dispute with Musk via a call, signaling that the rift may be permanent.

Business Fallout: Tesla’s Struggles Multiply

Tesla was already on a downward trend before the Musk-Trump fallout. In Q1 2025, revenue declined 9% year-over-year, while auto-specific revenue plunged 20% — driven by surging competition from Chinese EV makers like BYD, regulatory uncertainties, and customer sentiment tied to Musk’s controversial behavior.

Tesla has seen its European market share fall sharply, with sales dropping over 50% in April and continuing into May. Meanwhile, China sales were down 20% year-over-year. Analysts at Goldman Sachs slashed their 2025 price targets for Tesla, citing weak global deliveries and lack of compelling new EV models.

Musk’s Political Baggage Hurts the Brand

The backlash extends beyond Wall Street. Musk has faced criticism for controversial political affiliations, including support for Germany’s far-right AfD party and a widely criticized gesture during a political event, interpreted by many as a Nazi salute. This has led to global protests against Tesla:

• Tesla vehicles and facilities have been vandalized or set on fire in several U.S. cities.
• Protesters have staged demonstrations at Tesla stores in Europe and North America.
• Public ad campaigns in Times Square and London are urging consumers to boycott Tesla vehicles, branding them as “swasticars.”
• The Vancouver International Auto Show removed Tesla from its exhibitor list, citing safety concerns.

Operational Headaches: Recalls and Lagging Innovation

Tesla’s product quality is also under scrutiny. The company has issued eight recalls for the Cybertruck in just 15 months, citing software issues and hardware defects like faulty accelerator pedals.

At the same time, innovation at Tesla appears to be stalling. Musk continues to pitch a future centered around autonomous vehicles and robotics. However, competitors like Waymo (Alphabet) are far ahead, already operating robotaxi services in several U.S. markets.

Tesla’s much-anticipated robotaxi rollout in Austin is set to begin with just 10 to 20 Model Y vehicles, geofenced to a specific area — a modest start that casts doubt on Musk’s grand visions.

Leadership Vacuum and Shareholder Dismay

Tesla’s board is under growing pressure. Musk’s critics, including public officials and pension fund managers, argue that the company needs a dedicated CEO focused solely on business recovery.

• NYC Comptroller Brad Lander described the Musk-Trump feud as a “schoolyard fight” threatening shareholder value.
• Maryland Comptroller Brooke Lierman criticized the board for failing to distance Tesla’s image from Musk’s increasingly divisive personal brand.

“There needs to be a future for Tesla that’s not tied to Elon Musk,” Lierman stated.

Tariff Trouble and Regulatory Risk

Trump’s administration has hinted at cutting off Tesla from critical government support. This includes potential cancellation of contracts, denial of tariff exemptions, and increased scrutiny from regulatory bodies. These moves could increase Tesla’s cost base, particularly in manufacturing, where it relies on Chinese-made machinery and rare-earth components.

Looking Ahead: A Company in Crisis Mode

Tesla has stopped offering full-year growth guidance, citing uncertainty due to political instability and market conditions. Its Q1 earnings call hinted that the company will “revisit 2025 guidance” in the Q2 update, expected in July.

While Musk pins Tesla’s future on speculative ventures like autonomous fleets and AI-powered humanoid robots, investors remain skeptical. Meanwhile, political blowback, competitive pressure, and declining public trust may weigh on Tesla for years.

The Fallout is Far From Over

Tesla is no longer just an EV company. It’s a political flashpoint, a case study in corporate branding gone awry, and a lesson in how quickly shareholder optimism can vanish. As Musk fuels his own political ambitions — including calls for a new U.S. centrist party — Tesla’s ability to weather these storms depends on whether its board, shareholders, and customers can separate the company from its controversial CEO.