“This has been our family vehicle for three years, and it has been an absolute pleasure,” remarks Ben Kilbey, showcasing his pristine pearl-white Tesla Model Y.
Mr. Kilbey is a dedicated proponent of electric vehicles and leads a communications agency that champions sustainable businesses across the UK. However, he now states that his Model Y must be sold due to his strong disapproval of Tesla CEO Elon Musk’s conduct, particularly his handling of dismissals of US government personnel.
“I am not in favor of polarization or unkind actions,” he explains. “There are methods to operate without alienating or disparaging individuals. I dislike disparagement.”
Mr. Kilbey embodies a broader backlash against the Tesla executive, which has seemingly intensified in recent weeks after Mr. Musk’s appointment to lead the Department for Government Efficiency (DOGE), tasked with reducing federal expenditure.
Mr. Musk has also intervened in international politics, participating via video at a rally for the far-right Alternative für Deutschland party during Germany’s parliamentary election and launching online criticisms of British politicians, including Prime Minister Keir Starmer.
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For some who do not share his perspectives, the situation has become excessive.
Demonstrations have occurred outside numerous Tesla dealerships, not only in the US but also in Canada, the UK, Germany, and Portugal.
While most protests have been peaceful, incidents of vandalism targeting showrooms, charging stations, and vehicles have been reported. In separate occurrences in France and Germany, several vehicles were deliberately set ablaze.
In the US, the Tesla Cybertruck, a distinctive angular metallic pickup, has seemingly become a focal point for anti-Musk sentiments. Social media videos depict vehicles defaced with swastikas, covered in refuse, or repurposed as skateboard ramps.
US President Donald Trump promptly displayed his backing for Tesla by permitting the company to showcase its vehicles at the White House and vowing to purchase one. He asserted that violence against US showrooms should be classified as “domestic terrorism.”
Mr. Musk has also responded unequivocally. “This degree of violence is outrageous and fundamentally wrong,” he stated in a recent Fox News interview. “Tesla simply manufactures electric cars and has done nothing to merit these malicious attacks.”
Quantifying the precise impact of these events on Tesla’s business and determining the extent to which Mr. Musk’s views and involvement with the Trump administration have affected the brand and alienated traditional electric vehicle consumers remains challenging.
Consequently, questions arise about Tesla’s capacity to sustain its prior accomplishments with Mr. Musk continuing in his leadership role.
Elon Musk: A Polarizing Figurehead
Two decades prior, Tesla was a nascent Silicon Valley startup with a small workforce and ambitious aspirations to revolutionize the automotive industry. Today, it stands as the top-selling electric vehicle manufacturer in an expanding global market, operating substantial factories worldwide. Tesla is widely recognized for demonstrating that EVs could be rapid, potent, enjoyable, and practical.
Mr. Musk, the company’s prominent figurehead, has propelled this advancement since joining Tesla in 2004 as chairman and primary investor. He assumed the CEO position four years later and has maintained it throughout the company’s ascent to prominence.
“Tesla pioneered the EV movement,” notes Stephanie Valdez Streaty, director of industry insights at Cox Automotive, a car sector marketing, and software company. “They effectively introduced EVs to the mainstream, motivated other manufacturers to invest, and significantly raised awareness.”
It’s easy to overlook that electric cars were once dismissed as sluggish, uninspiring, impractical, and offering limited range. The Tesla Model S, launched in 2012, boasted sports car performance and a range exceeding 250 miles. It played a pivotal role in reshaping perceptions and laid the groundwork for rapid expansion.
Presently, Tesla transcends its role as solely an electric vehicle producer. It has invested heavily in autonomous driving technologies, aiming to establish fleets of driverless “robotaxis.” The company also possesses a rapidly growing energy storage division and is developing a general-purpose humanoid robot named Optimus.
Similar to the late Steve Jobs at Apple, Mr. Musk became synonymous with his brand, consistently serving as the public face at corporate events and product introductions, cultivating a dedicated following among EV enthusiasts.
However, the champion of sustainable technology has recently gained equal notoriety for promoting his political viewpoints, disseminating them through his social media platform, X. Concurrently, Tesla itself has encountered increasing challenges.
Sales Decline and Brand Perception
While the Model Y achieved the status of the world’s best-selling car the previous year, Tesla’s overall sales experienced their first decrease in over a decade, declining from 1.81 million to 1.79 million units.
Although the decrease was marginal, and Tesla maintained its position as the global leader in electric vehicle sales, it triggered concerns for a business oriented towards growth. Annual profits also diminished.
The current year commenced unfavorably, particularly in Europe, where new registrations plummeted 45% in January compared to the same month in 2024. Further declines were observed in major European markets in February, although the UK presented an exception with a 21% sales increase, as did Australia.
Simultaneously, shipments of Tesla’s vehicles manufactured in China, intended for both domestic and international markets, decreased by over 49% in the same period.
In early March, USB analyst Joseph Spak projected a 5% decrease in Tesla’s worldwide sales for the current year, countering market expectations of 10% growth. This forecast contributed to a significant drop in Tesla’s stock value, falling 15% in a single day and contributing to an overall 40% decrease since the beginning of the year.
While numerous factors can influence sales fluctuations, research from Morning Consult Intelligence suggests Mr. Musk’s actions have indeed negatively impacted Tesla, especially in the EU and Canada, with China remaining a key market largely unaffected.
In the US, the impact is less clear, with many consumers supportive of DOGE’s government spending reductions. However, Morning Consult notes: “Musk may be alienating US consumers most inclined to purchase a Tesla. Among affluent consumers intending to buy an EV in the future, Tesla’s ranking has slipped compared to competitors over the past year.”
Tesla did not respond to requests for comment from the BBC regarding its sales decline.
However, industry experts suggest Tesla faces more profound challenges than just the CEO’s public image.
Outdated Models and Rising Competition
Initially groundbreaking, Tesla’s current model lineup now appears less innovative. The pioneering Model S debuted in 2012, followed by the Model X in 2015. Even the more recent and accessible Model 3 and Model Y are starting to seem aged in an increasingly competitive landscape.
“Examining their product range, there have been no recent major model introductions, excluding the niche Cybertruck,” states Ms. Valdez Streaty. “While the Model Y received a refresh, it wasn’t a significant event. The market now offers considerably more competition.”
Professor Peter Wells, Director of Cardiff University’s Centre for Automotive Industry Research, echoes this sentiment: “We haven’t observed the level of product innovation that perhaps Elon Musk should have pursued. I believe this is a substantial contributor to their current issues.”
Competition is emerging from diverse sources. Traditional automakers have made substantial investments in transitioning to EV production, with brands like Kia and Hyundai from Korea gaining recognition for producing high-quality electric vehicles.
Furthermore, numerous new EV brands have emerged from China. These include companies like BYD, experiencing rapid growth by offering well-performing vehicles at competitive prices, and more premium brands like Xpeng and Nio, prioritizing luxury and cutting-edge technology.
“China provides substantial incentives and subsidies for EVs,” comments Ms. Valdez Streaty.
“The expansion of Chinese firms, particularly BYD, is evident not only in China but globally. This represents a significant threat, not just for Tesla but for other manufacturers as well.”
The magnitude of this threat was underscored in mid-March when BYD announced an ultra-fast charging system capable of delivering 250 miles of range in just five minutes – significantly faster than Tesla’s Supercharger network.
Robotaxis: Unfulfilled Promises?
Mr. Musk’s comments during Tesla’s earnings calls suggest his priorities lie elsewhere, notably in autonomous vehicles.
In January, he asserted that Tesla would launch a robotaxi service in Texas by June. However, this claim was met with skepticism from commentators who noted Mr. Musk’s history of similar promises.
For instance, in 2019, he predicted a million Tesla vehicles capable of operating as robotaxis within a year. Meanwhile, Tesla’s “Full Self-Driving” package remains a “hands-on” system requiring constant driver attentiveness.
“Each year brings a new pledge from Elon Musk about imminent autonomous cars. The problem is, they never seem to materialize,” observes Jay Nagley from automotive consultancy Redspy.
Musk’s Expanding Portfolio and Tesla’s Needs
Tesla arguably requires strong leadership presently. Irrespective of his political affiliations, the CEO is managing a diverse array of ventures. He leads other businesses, notably the social media platform X, the AI firm xAI, and the space exploration company SpaceX, which has faced setbacks with recent Starship rocket launches.
When questioned about managing all these commitments alongside his government role in a recent Fox Business interview, Mr. Musk responded “with significant difficulty.”
“The extent of Mr. Musk’s direct management of Tesla today is uncertain,” states Professor Wells.
“If he remains responsible for critical decisions regarding product strategy and factory locations, these decisions must be sound. This necessitates a leader with a dedicated, unwavering commitment to understanding the automotive sector and making informed choices.”
Since joining Tesla in 2004, Elon Musk’s position has been unchallenged. Currently, there are no evident indications of change. He remains the largest individual shareholder, holding a 13% stake valued at over $95 billion.
This share is roughly equivalent to the combined holdings of investment giants Vanguard and Blackrock, while other financial institutions including State Street Bank and Morgan Stanley possess smaller shares.
For these investors, the recent stock price declines are concerning. However, the price remains nearly 30% higher than a year prior. The recent downturn has essentially reversed a dramatic surge following the election, which nearly doubled Tesla’s market capitalization.
Calls for Leadership Transition
Tesla’s current valuation still exceeds 100 times its earnings—significantly higher than automotive competitors like Ford, General Motors, or Toyota. This suggests investors continue to anticipate technological breakthroughs and rapid expansion.
“Tesla is valued as either the eventual dominant force in electric vehicles—which appears unlikely given the strength of Chinese manufacturers—or as the leader in robotaxis and autonomous driving,” states Mr. Nagley.
Currently, major investors are not publicly advocating for leadership changes. However, investment fund manager Ross Gerber, a long-term shareholder turned critic, publicly called for Mr. Musk’s resignation in recent media interviews.
Analysts suggest that the company would gain from a leadership transition. “Appointing a new CEO would undoubtedly benefit Tesla at this juncture,” argues Matthias Schmidt of Schmidt Automotive Research.
“It would mitigate the negative repercussions stemming from Musk, resolve the inherent conflict of interest with his DOGE role, and enable a dedicated CEO to fully concentrate on the core business demands.”
“This seems to be the logical progression,” concludes Professor Wells. “They require someone with extensive automotive industry expertise, capable of rationalizing the business operations.”
“A significant shift in direction is now necessary.”
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