Elon Musk vs. US Government: Tesla Faces Backlash

The Shifting Fortunes of Tesla

Elon Musk is widely recognized for transforming Tesla into a symbol of innovation, spearheading the transition towards widespread vehicle electrification. However, his increasing involvement in political affairs – particularly his association with President Trump and engagement with the federal government – has introduced a period of instability for the company.

Erosion of Brand Image

A significant number of potential Tesla purchasers now perceive the brand as having lost its appeal to progressive consumers. While Musk has consistently been the public face of Tesla, this association has become detrimental as he implements substantial workforce reductions and contributes to the dismantling of federal initiatives through the Department of Government Efficiency.

Financial Performance and Sales Decline

Tesla’s first-quarter earnings revealed a substantial 71% decrease in profits, coinciding with declining sales and growing opposition to Musk. The company reported 336,681 vehicle deliveries during the initial three months of 2025.

This represents a downturn from the 495,570 deliveries recorded in the fourth quarter of 2024 and the 386,810 deliveries made in the first quarter of the previous year. This follows a less successful 2024, characterized by fewer deliveries compared to 2023 due to production challenges and heightened competition in the electric vehicle market.

Global Backlash and Market Impact

For many observers, Musk’s political activities have positioned Tesla as a controversial entity. Trade-in rates for Tesla vehicles have reached unprecedented levels, and sales figures in Europe have experienced a decline.

Calls for boycotts are emerging from international leaders, and the company’s stock value has diminished by approximately 50% since December. Protests are ongoing outside Tesla locations – showrooms, dealerships, and charging stations – aimed at diminishing the brand’s value and, consequently, Musk’s personal wealth.

Industry Expert Concerns

“They are facing a notable public image crisis, unlike anything previously observed within this sector,” stated Sean Tucker, lead editor at Kelley Blue Book, in an interview with TechCrunch.

Even Dan Ives, a long-time advocate for Tesla, has urged Musk to prioritize his business operations over political involvement, warning of potentially adverse consequences for the company. Despite Musk’s recent statement regarding a reduced role with DOGE, he remains committed to its development.

Reframing Tesla as an AI Company

In an effort to mitigate the negative impact, Musk is emphasizing Tesla’s identity as an artificial intelligence company, rather than solely an automaker. He envisions the future commercialization of self-driving vehicles and humanoid robots.

The Road to Recovery

The central question now revolves around the potential for the Tesla brand to regain its former standing.

The following events, which TechCrunch will continue to monitor and update, are currently influencing public perception of the Tesla brand and may have long-term implications for its future.

Declining Tesla Sales in Europe

Tesla has experienced a significant decrease in new vehicle sales throughout Europe, contrasting with the growth observed in other electric vehicle brands on the continent.

During the initial four months of 2025, Tesla's European sales declined by 37.2%. Notably, Sweden witnessed an even more substantial year-over-year reduction of 81% in Tesla sales.

Germany's Shift in Consumer Preference

Germany, historically a key market for Tesla and the location of a major Tesla gigafactory, is demonstrating a marked change in consumer sentiment towards Elon Musk's company.

Recent polling data, encompassing 100,000 German respondents, reveals that 94% would not consider purchasing a Tesla vehicle.

This shift is reflected in sales figures; in March 2025, Tesla's sales in Germany were down 42.5%.

This represents an improvement, albeit slight, compared to the 75% sales decline recorded in February of the same year.

Broader European Trends

• Sales of competing electric vehicle brands are increasing across Europe.
• The decline in Tesla sales is particularly pronounced in key markets like Sweden and Germany.
• Consumer sentiment in Germany has demonstrably turned against the Tesla brand.

The data suggests a growing resistance to Tesla vehicles within the European market, despite the overall expansion of the electric vehicle sector.

Succession Planning at Tesla

According to a May report in the Wall Street Journal, Tesla's board of directors initiated a search for a potential successor to Elon Musk around the beginning of April.

This search coincided with Musk’s increased involvement in Washington D.C., where he was advocating for reductions in government expenditure.

Following the publication of the report, Tesla chair Robyn Denholm firmly refuted the claims, stating that the WSJ’s reporting was “absolutely false.”

However, the report inevitably prompts consideration of succession planning, particularly in the event of continued negative impacts on brand value linked to Musk.

During Tesla’s first-quarter earnings call, Musk indicated he would reduce his involvement with DOGE.

Crucially, he also affirmed his intention to remain with the agency throughout the duration of Donald Trump’s presidency.

Key Considerations

• The timing of the reported search aligns with Musk’s political activities.
• Denholm’s denial does not entirely dismiss the possibility of future planning.
• Brand perception and its impact on Tesla remain a central concern.
• Musk’s commitment to his role is contingent on the current presidential administration.

The situation highlights the importance of proactive succession planning for companies heavily reliant on a single, prominent leader.

Maintaining a clear path forward ensures stability and investor confidence, regardless of future circumstances.

Demonstrations Now Recognized as a Potential Threat

Worldwide demonstrations, dubbed “Tesla Takedown” protests, are gaining momentum. These actions aim to dissuade consumers from purchasing Tesla vehicles and to encourage the divestment of Tesla stock.

Protesters believe that impacting Musk’s financial standing – where a significant portion of his influence resides – will be an effective strategy. This development has now been formally acknowledged as a risk factor in Tesla’s recent regulatory disclosures.

Formal Risk Acknowledgement

Tesla’s latest filings with the Securities and Exchange Commission (SEC) now include a warning regarding specific criticism. This criticism, the filings state, has triggered protests, with some instances unfortunately escalating to violence directed at Tesla’s facilities, products, and employees.

Legal counsel for Tesla has broadened the scope of potential repercussions. They indicate that negative public sentiment stemming from these protests, coupled with wider criticism of the company, could negatively affect the Tesla brand and sales figures.

Potential Financial Implications

The SEC filings further suggest that such perceptions could also complicate future fundraising efforts should the need arise. This highlights the potential for significant financial consequences.

The company is now officially recognizing the potential for protests to materially impact its business operations and financial health. This represents a notable shift in how Tesla views external pressures.

Tariff Vulnerability

Despite being the automotive manufacturer most capable of mitigating the impact of potential tariffs imposed by the Trump administration within the United States, Tesla remains susceptible to negative consequences stemming from Elon Musk’s relationship with the president.

Dan Ives, an analyst at Wedbush, revised Tesla’s price target downward to $315 in April, a reduction from the previous $550. This adjustment was again attributed to concerns that Musk’s political affiliations are generating a branding challenge for the company.

Ives further highlighted that Musk’s connection to Trump, and consequently to the president’s tariff strategies, is not merely influencing sales figures in both the U.S. and Europe. It also poses a risk to Tesla’s market standing in China.

This situation is actively encouraging Chinese consumers to favor domestic brands, such as BYD, thereby intensifying competition.

Impact on Global Markets

The analyst suggests that this shift in consumer preference is “further driv[ing] Chinese consumers to buy domestic.”

Consequently, Tesla’s international growth strategy, particularly within the crucial Chinese market, could be significantly hampered by perceptions linked to Musk’s political alignment.

• U.S. and European Sales: Affected by concerns over Musk’s political stance.
• Chinese Market: Facing increased competition from domestic automakers like BYD.

The situation underscores the complex interplay between political associations and brand perception in the global automotive industry.

Analyst Perspective

Ives’ assessment indicates that the perceived alignment between Musk and Trump represents a tangible business risk for Tesla.

This risk extends beyond immediate tariff implications, impacting long-term brand loyalty and market share, especially in strategically important regions like China.

The Impact of Political Alignment on Tesla's Consumer Base

Investigations have recently indicated that Elon Musk’s evolving political stances have influenced his customer demographics. Specifically, a segment of Tesla’s traditional customer base – Democrats – appears to be diminishing in their purchasing interest.

Conversely, this shift in political alignment has simultaneously enhanced Musk’s appeal among Republican voters.

Shifting Consumer Preferences

Research conducted by teams at Northeastern University, Columbia University, and the University of Iowa reveals a notable change in Republican purchasing behavior. Before Musk publicly endorsed Donald Trump, only 7% of Republicans expressed a likelihood to buy a Tesla.

Following the endorsement, this figure rose to 10.2%, demonstrating a clear correlation between Musk’s political support and increased interest from Republican consumers.

Reciprocal Endorsements and Brand Perception

This positive trend for Tesla within the Republican demographic is likely to be further strengthened by reciprocal endorsements. Donald Trump has actively supported both Musk and the Tesla brand.

A recent example of this support was Trump’s unsolicited promotion of Tesla during an event at the White House on March 11th, effectively providing the company with free advertising.

Tesla is navigating a changing political landscape, and these endorsements are shaping consumer perceptions.

The company’s brand image is becoming increasingly intertwined with political affiliations, influencing purchasing decisions across the political spectrum.

Tesla Stock and Future Plans

During a hastily arranged, and somewhat unstable, livestreamed presentation to Tesla staff and investors on March 20th, Elon Musk urged them to retain their stock holdings, even amidst what he described as a potentially catastrophic market situation.

Market Sentiment and Self-Driving Technology

Musk acknowledged the difficulty many investors face in envisioning a future where Tesla’s existing fleet of 10 million vehicles could offer five to ten times their current value. This statement referenced the previously asserted capability of existing Teslas to achieve full self-driving functionality through a software upgrade alone.

Focus on the Cybercab

Employees were directed to disregard external criticism and concentrate their efforts on the development of the Cybercab. This vehicle is envisioned as a two-passenger robotaxi, designed without traditional steering wheels or pedals.

The production of the Cybercab is currently hindered by existing federal regulations. These regulations prohibit the large-scale manufacturing of vehicles lacking conventional human controls, a situation Musk intends to address through regulatory changes.

Manufacturing Innovation

Musk highlighted the ambitious nature of the Cybercab’s manufacturing process. He described it as a highly advanced “high-speed consumer electronics line” capable of producing a vehicle in under five seconds.

Optimus Robot Production

Furthermore, Musk announced a target of producing approximately 5,000 Optimus robots this year. He expressed his belief that these robots will ultimately represent Tesla’s most significant asset.

Looking Ahead

• Stock Stability: Musk’s reassurance to hold stock despite market volatility.
• Cybercab Development: Prioritization of a driverless robotaxi.
• Regulatory Challenges: Intent to modify regulations for autonomous vehicle production.
• Robotics Advancement: Increased production of Optimus robots.

A Critical Juncture

Coinciding with an unexpected company-wide meeting, Tesla analyst Dan Ives communicated in a report that Elon Musk’s focus on DOGE has instigated a significant “brand crisis” for both Musk and Tesla.

Ives asserted that regardless of one’s stance on DOGE, the core issue lies in Musk’s concentrated attention on the cryptocurrency – rather than his duties as Tesla’s CEO – particularly following the return of Donald Trump to the political arena.

This shift in focus, according to Ives, has inadvertently transformed Tesla into a political symbol, a development he views negatively.

The analyst suggests that this situation represents a pivotal “moment of truth” for the company’s brand image.

Essentially, the concern centers around the perception of Tesla being more aligned with a specific political viewpoint due to Musk’s public engagement with DOGE.

Implications of Increased DOGE Involvement

• The analyst believes that Musk’s dedication to DOGE is diverting attention from Tesla’s core business objectives.
• This perceived distraction has the potential to damage Tesla’s broad appeal to consumers.
• The association with a potentially polarizing cryptocurrency could alienate segments of the market.

Ives’ analysis highlights the risks associated with a CEO’s personal ventures impacting the public perception of their company.

He emphasizes that the issue isn’t necessarily about the merits of DOGE itself, but rather the implications of Musk’s extensive involvement.

Acts of Vandalism and Violence Targeting Tesla

A series of attacks have been directed at Tesla properties and assets. These include showrooms, charging stations, company facilities, and even vehicles belonging to private owners.

The extent of the damage varies considerably. Some incidents involve minor vandalism, such as spray paint and scratches to vehicle exteriors.

However, more severe acts of violence have also occurred. Tesla dealerships have experienced shootings, and arson attacks have been carried out on charging stations, with Molotov cocktails being used in some instances.

Elon Musk's Reaction

Elon Musk has publicly expressed his confusion regarding the motivation behind these attacks, questioning why anyone would intentionally target Tesla.

Former President Trump's Stance

In contrast, former President Trump has taken a firmer position. He has stated that any form of violent act, even seemingly minor ones like spray-painting, will be considered domestic terrorism by the federal government.

On his Truth Social platform, Trump remarked, “I look forward to watching the sick terrorist thugs get 20-year jail sentences for what they are doing to Elon Musk and Tesla.” He further suggested that these sentences could be served in El Salvador’s prisons, referencing their recent notoriety.

Legal Action Taken

Currently, the Department of Justice has filed charges against three individuals. These individuals are suspected of being involved in the violent destruction of Tesla properties.

Tesla Faces Growing Opposition

A nationwide movement, known as the Tesla Takedown, has spurred peaceful demonstrations throughout the country.

These protests are focused on Tesla dealerships and showrooms, with the intention of dissuading potential customers from purchasing Tesla vehicles.

The movement also seeks to motivate current Tesla owners to exchange their cars and investors to divest their stock holdings.

Escalating Tensions

While the initial protests have remained non-violent, indications suggest a rise in antagonistic reactions.

An incident occurred in Florida in March where an individual intentionally drove an SUV into a group of protestors gathered near a Tesla dealership in Palm Beach.

This event highlights a concerning trend of potential violence emerging in response to the demonstrations.

Protest Objectives

The core aim of the Tesla Takedown movement is multifaceted.

It encompasses efforts to reduce demand for Tesla products and to influence financial decisions related to the company.

Protestors are actively attempting to impact both consumer behavior and investor confidence.

• Discouraging new Tesla purchases.
• Encouraging existing owners to trade in their vehicles.
• Pressuring stockholders to sell their shares.

Tesla Takedown Protests and Extremist Involvement

During the last weekend of March, demonstrations known as Tesla Takedown protests occurred at Tesla showrooms nationwide, attracting thousands of participants.

These protests were met with limited counter-demonstrations in certain areas. These opposing groups primarily consisted of individuals expressing support for the MAGA movement, as reported by Wired.

Presence of Far-Right Groups

Investigations revealed the presence of far-right extremist elements within the counter-protest groups. This included documented members of the Proud Boys organization.

Furthermore, armed militia groups were also identified among those opposing the Tesla Takedown protests.

The involvement of these groups raises concerns about the motivations and potential escalation of tensions surrounding the demonstrations.

It is important to note that the Proud Boys are a designated extremist organization with a history of engaging in political violence.

The presence of armed militias further contributes to a potentially volatile situation.

The “Roman” Salute Controversy

During a rally held in January to commemorate Trump’s inauguration, Elon Musk performed an action widely interpreted as a Nazi salute, potentially even twice.

This situation has been further complicated by Musk’s expressed endorsement of the Alternative for Germany (AfD), a far-right political party, and his prior dissemination of posts containing antisemitic content.

Following the salute incident, demonstrations took place. Activists projected an image of Musk performing the salute, accompanied by the word “Heil,” onto the facade of Tesla’s gigafactory located in Berlin.

Context of the Incident

The gesture made by Musk at the rally has drawn significant criticism and sparked debate regarding its intent and implications.

His subsequent support for the AfD party, known for its nationalist and anti-immigration stances, has added to the concerns raised by the incident.

Public Reaction and Protests

The projection onto Tesla’s Berlin gigafactory served as a direct response to Musk’s actions and a form of protest against his perceived views.

This demonstration highlights the strong negative reaction from activists and the broader public regarding the salute and Musk’s associated political affiliations.

Further Considerations

• Antisemitism: Musk’s history of sharing antisemitic posts raises questions about his understanding of and sensitivity towards issues of hate speech.
• Political Alignment: His support for the AfD party aligns him with a political ideology that is often associated with extremism and intolerance.
• Brand Reputation: The controversy surrounding the salute and Musk’s political views poses a potential risk to the Tesla brand’s reputation.

The incident continues to be a subject of discussion and scrutiny, with ongoing implications for Musk and his companies.

BYD's Recent Advancements

BYD, a major rival to Tesla, has announced notable progress in electric vehicle (EV) charging technology. The Chinese automaker claims its latest models can achieve a full charge in just five minutes, potentially providing a substantial advantage over Tesla and other EV manufacturers.

Despite China being a key market for Tesla, BYD is increasingly challenging its position within the country. Recently, BYD introduced its "God’s Eye" driver-assistance system.

This system is comparable to Tesla’s Autopilot and Full Self-Driving (FSD) capabilities. Importantly, it will be standard equipment across BYD’s entire EV range, even including the remarkably affordable $9,600 Seagull hatchback.

Revenue Performance

BYD is consistently gaining traction with consumers due to its innovative and technologically advanced EVs and hybrid vehicles. The company has now exceeded Tesla in terms of revenue generation.

In 2024, BYD reported revenues totaling $107 billion. This figure surpasses Tesla’s reported revenue of $97.7 billion for the same period.

Tesla's Challenges: An Aging Product Range and Cybertruck Recalls

For several years, Tesla has operated with a vehicle lineup that is becoming dated. The Cybertruck was positioned as a crucial new model, intended to demonstrate the company’s continued ability to innovate.

Initial consumer response to the truck in the American market has been positive, indicating a degree of success.

Recurring Issues with the Cybertruck

Despite the initial enthusiasm, Tesla has been compelled to issue eight recalls for the Cybertruck since its release in November 2023.

The most recent recall affects 46,000 vehicles. It concerns an exterior steel trim panel, located on the side of the windshield, which appears to have been inadequately affixed.

Reports suggest the panel can detach easily, leading to concerns about its secure installation – some have likened the adhesion to that of superglue.

These recalls highlight potential quality control issues and represent a setback for Tesla as it attempts to establish the Cybertruck as a flagship product.

The situation underscores the challenges Tesla faces in balancing ambitious innovation with reliable manufacturing processes.