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The Trump administration’s support for Tesla may be backfiring on the electric car company.
And there are signs it could get worse.
Tesla posted a far steeper than expected decline in first-quarter deliveries Wednesday, a sign that CEO Elon Musk’s political activities are hitting the company’s fortunes. The manufacturer announced it had delivered 336,681 electric vehicles globally, a decline of about 13 percent from the same period last year and a result that fell below even pessimistic Wall Street forecasts.
The drop came on the heels of declining Tesla sales in Europe, surging U.S. sales by rival EV-makers, and widespread protests among liberals because of the work that Musk has done for President Donald Trump and his agenda. On Wednesday, Wall Street analysts largely blamed Musk’s role with the Trump administration for Tesla’s newest troubles, even as the company attributed the decline to production issues with its popular Model Y.
In short, Tesla is in the middle of a “crisis tornado,” according to Dan Ives, a Wedbush Securities analyst and longtime Tesla booster.
A key reason, he said, is the alliance of Musk and Trump.
Musk spent $277 million in support of Trump and other Republicans during the 2024 election. And since Trump took office, Musk has led an across-the-board effort to cut the federal workforce and shrink the U.S. government — a campaign that’s enraged many liberals — while dumping big money into an unsuccessful effort to flip Wisconsin’s Supreme Court to the conservatives.
At the same time, the Trump administration has gone all-out for Musk and Tesla.
Commerce Secretary Howard Lutnick recently told Fox News viewers to buy Tesla stock. Attorney General Pam Bondi said last week that a Democratic congresswoman should “tread very carefully” when talking about Musk and Tesla protests. The FBI last week announced the formation of a Tesla threats task force. And Trump’s new round of auto tariffs could hurt Tesla’s rivals.
Yet none of those examples compare with Trump’s decision last month to shop for a new Tesla on White House grounds. That public display turned the company’s challenges into “more of a political lightning rod,” Ives wrote in an investor note last month.
On Wednesday, Ives called Tesla’s delivery numbers a “disaster on every metric.” He wrote in a note to investors that Musk faced a “fork in the road moment” — a reference to a January email in which Musk’s team offered federal workers a chance to quit their jobs — to either continue with Trump’s Department of Government Efficiency or return his focus to his company.
“The brand crisis issues are clearly having a negative impact on Tesla … there is no debate,” he wrote.
Broadly speaking, the blowback against Tesla makes sense.
Electric vehicles have long appealed to liberal and Democratic consumers because driving them doesn’t contribute to climate change.
So Musk’s association with Trump — a divisive Republican politician who has described global warming as a hoax — naturally would chill support for Tesla among liberal drivers, observers said.
“If you decide to willingly alienate your customer base, you’re not going to be able to sell your product,” said Alexander Edwards, president of Strategic Vision, an automotive research and consulting firm.
But it doesn’t end there. Trump also spent much of the 2024 campaign vilifying electric vehicles and vowing to end federal support for them. The rhetoric hasn’t done much to endear electric vehicles to conservatives, observers said — despite Musk’s support for Trump.
“People that are most likely to buy an electric vehicle are less likely than ever to purchase a Tesla as an electric vehicle,” said K.C. Boyce, vice president of Escalent, an auto market analysis firm. “And while conservatives may like Tesla more, they’re not really all that much more likely to purchase an electric vehicle.”
Boyce’s data shows a widening political chasm for Tesla since Election Day. His company found that 53 percent of liberals are less likely to consider purchasing a Tesla than they were six months ago. At the same time, 31 percent of conservatives are more likely to consider purchasing the car.
These attitudes are reflected in U.S. auto sales. Though Tesla still dominates the American electric vehicle market — accounting for 42 percent of EV sales in January, according to S&P Global Mobility — it’s seen its share of the pie shrink. Just a year earlier, Tesla made up more than half of all new American electric vehicle purchases.
The used-car market has seen movement too. Americans are ditching their Teslas at a higher rate than before, according to Edmunds. The automotive research group found that 1.4 percent of used cars are Tesla, compared with just 0.4 percent at this time last year.
Europe too appears to have fallen out of love with Tesla.
Last week, the European Automobile Manufacturers Association released data showing that Tesla sales for January and February declined by 43 percent compared with last year. That loss came as overall sales of EVs in Europe increased by 30 percent.
And those losses could grow. A majority of people in France, or 57 percent, are now preparing to boycott Tesla and other American brands in response to Musk and Trump, according to a survey released last week.
Tesla did not respond to a request for comment from POLITICO’s E&E News. Musk, meanwhile, used his social media company X to highlight good news for Tesla, including sales numbers in Norway and China as well as its advances in robotics.
The White House, when asked to respond, took aim at Democrats for their criticism of Musk’s company. In particular, they blasted former vice presidential nominee Tim Walz for saying that he enjoyed watching Tesla stock drop in value, a comment Walz later walked back.
“While deranged Democrats like Tim Walz are openly calling for the ruin of an iconic American company that employs tens of thousands of everyday Americans, the Trump administration is committed to unleashing prosperity for all of our companies, industries, and workers,” said White House spokesperson Kush Desai.
But it’s clear that frustration with Tesla is building among both investors and activists.
On Wednesday, Ross Gerber, a major Tesla investor who owns about $100 million in company stock, wrote on X that “Tesla needs a real CEO.”
“The brand is broken and may not be fixable,” he wrote.
Perhaps in response to such criticisms, Musk recently held an all-hands meeting with Tesla employees and encouraged them to “hold on to your stock” even as top Tesla board members and a senior executive offloaded their holdings.
After that meeting, Wall Street fears temporarily eased, and Tesla’s stock rose more than 12 percent in a day, marking the company’s biggest rally since Election Day.
That bounce was quickly erased last week after it was revealed that the Chinese company BYD — Tesla’s top rival — reported $107 billion in sales in 2024. That’s about $9 billion more than Tesla posted. On Wednesday, Tesla stock dipped again in pre-market trading on the news of weak deliveries but began to rise shortly after POLITICO broke the news that Musk would soon leave Trump’s inner circle.
Musk suffered a brutal political loss Tuesday evening in the Wisconsin Supreme Court race, where he had invested more than $20 million and traveled to the state to boost the conservative candidate who lost by 10 points. Democrats won the race by making it all about Musk, a signal that his continued involvement in politics will remain a potent political cudgel that can be used against Trump.
But some potentially good news for Tesla will come later Wednesday, when Trump is expected to levy a 25 percent tariff on imported cars and parts. That shouldn’t do much to Tesla’s bottom line, as the company domestically manufactures all of its cars sold in the United States. But it could mean a number of Tesla’s competitors will have to raise prices by thousands of dollars. Trump told reporters gathered in the Oval Office last week that Musk did not weigh in on the tariffs “because he may have a conflict.”
Adding to Tesla’s headaches are widespread protests and acts of vandalism against the company.
Tesla vehicles have been burned and defaced with graffiti nationwide. And protests at the company’s dealerships and chargers have intensified by the week. A major round of protests occurred throughout the country Saturday.
A growing number of Democratic politicians also are encouraging boycotts of Musk’s companies.
At a recent “Tesla Takedown” rally, Rep. Jasmine Crockett (D-Texas) told the crowd that the only language Musk and other top Trump administration officials understood is the “language of money.”
“On March 29, it’s my birthday, and all I want to see happen on my birthday is for Elon to be taken down,” Crockett said.
After those comments, Bondi warned Crockett to “tread very carefully.”
