^{Photo: Current Affairs - Adda247}

Beyond the Twitter Storm

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 Fundamentals Are Deteriorating

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.

Robotaxis and AI: Hype vs. Reality

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.

• The current service operates only in Austin, Texas, available to a limited number of hand-picked customers.
• Tesla employees still sit in the passenger seat to monitor performance.
• Videos have surfaced showing robotaxis driving on the wrong side of the road and nearly crashing into parked cars.
• By contrast, Waymo (Alphabet’s self-driving unit) already offers a fully driverless taxi service in four cities and plans to expand to Miami and Washington, D.C., in partnership with Uber.

Musk has offered no concrete dates for Tesla’s expansion or when cars will run without human supervision.

Sales Slide and Market Share Erosion

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?

• Increased competition from Western automakers and aggressive Chinese EV brands like BYD, which may surpass Tesla in global EV sales this year.
• Tesla’s reliance on U.S. incentives is faltering — the $7,500 tax credit will disappear on October 1, and when a previous version ended in 2019, Tesla had to cut car prices by nearly half the value of the lost credit to maintain demand.

Brand Backlash and Political Fallout

Tesla is also paying a price for Musk’s political behavior.

• Hundreds of protests have erupted outside Tesla showrooms in the U.S., Canada, and Europe.
• Once a brand aligned with innovation and environmental progress, Tesla now struggles with an identity crisis fueled by Musk’s controversial statements and actions.
• Initially, Trump even promoted Tesla, buying a vehicle and encouraging his followers to do the same. But with Musk now forming the “America Party” and publicly criticizing Trump, Tesla risks alienating both conservatives and progressives.

Dan Ives of Wedbush Securities noted:

“He’s managed to alienate everyone… The soap opera just keeps going on.”

Investor Pressure on Musk and the Tesla Board

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:

• Tying Musk’s compensation to time spent at Tesla.
• Enforcing oversight on political activity.
• Refocusing leadership on AI, manufacturing, and product rollout — not campaigning.

Musk’s response to Ives?

“Shut up, Dan.”
A reply posted directly on X, drawing further criticism about his impulsiveness.

A Company at a Crossroads

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.