Photo: Current Affairs - Adda247
While Elon Musk’s recent clash with Donald Trump is dominating headlines, the real crisis at Tesla goes far beyond political squabbles. Beneath the social media fireworks, Tesla’s core business is facing its most serious challenges in years: sliding global sales, eroding profitability, shrinking market share, and regulatory disadvantages that could dramatically hurt future revenue.
Tesla's stock dropped 6.8% on Monday, erasing nearly $70 billion in market cap, and recovered only 1.3% the next day, as Wall Street grows increasingly concerned that Musk's political aspirations are overshadowing the company’s most crucial growth phase.
Tesla’s financial outlook is now under intense scrutiny. The automaker’s Q1 2025 net income plunged 71% year-over-year, despite Musk’s repeated promises about a “robotaxi revolution” and AI-driven expansion. Analysts from William Blair downgraded Tesla from “buy” to “market perform,” citing both political distractions and the weakening financial foundation.
A major hit came from President Trump’s new tax and spending bill, which eliminates the $7,500 EV buyer tax credit and removes emissions penalties that once made Tesla’s regulatory credit business highly profitable.
According to William Blair, Tesla generated $10.6 billion in emissions credits since 2019. Without these credits, Tesla would have reported annual losses in several years, including a negative result in Q1 2025.
Musk has tried to redirect investor attention to the future — namely autonomous vehicles, robotics, and AI. But Tesla’s robotaxi program is far from market-ready.
Musk has offered no concrete dates for Tesla’s expansion or when cars will run without human supervision.
Tesla's global sales have fallen 13% year-over-year for two consecutive quarters — a record decline for the company. While EV demand overall is growing, Tesla’s slice of the pie is shrinking.
Why?
Tesla is also paying a price for Musk’s political behavior.
Dan Ives of Wedbush Securities noted:
“He’s managed to alienate everyone… The soap opera just keeps going on.”
Ives and other analysts argue that Tesla's board must impose governance measures to prevent Musk’s political endeavors from derailing the company further. Suggestions include:
Musk’s response to Ives?
“Shut up, Dan.”
A reply posted directly on X, drawing further criticism about his impulsiveness.
Tesla stands at a critical inflection point. The opportunity to lead in AI and robotics is real — but only if the company stabilizes its operations, regains market trust, and focuses on execution. Political distractions, missed deadlines, and dwindling incentives could push Tesla from industry leader to cautionary tale.
For investors, customers, and analysts, the message is clear: Tesla’s problems run deeper than Musk’s headlines — and time is running out to fix them.