NEW YORK (AP) — Elon Musk has earned titles like Moonshot Master, The Edison of Our Era, and The Designer of Tomorrow, yet he faces a significant issue with his automobile business, one that may be beyond his ability to resolve: harm to its reputation.
Tesla’s sales have dropped significantly due to protests and boycotts stemming from Musk’s alignment with extreme right-wing ideologies. The company has seen profits cut down by more than half this year, while competitors from China, Europe, and the U.S. are capitalizing on the situation.
Tuesday brought some respite when Musk declared during an earnings call for investors that he plans to reduce his involvement in the government cost-reduction role in Washington to just “a day or two each week,” thereby allowing him to concentrate more on his previous position at Tesla as the company’s head.
On Wednesday, investors caused Tesla’s stock price to rise by 5%, despite numerous obstacles still remaining.
Who wants a Tesla?
On the investor call, Musk appeared to minimize the impact of brand damage on the decline in first-quarter sales. Rather, he focused on a temporary factor: an update to Tesla’s top-selling Model Y that led to factory closures and affected both supply and demand.
Although financial experts tracking the firm have pointed out that likely purchasers may have refrained from buying as they awaited the new version, which affected outcomes negatively, even those who remain optimistic acknowledge that harm to the brand’s reputation is significant and particularly concerning.
This is a fully escalated crisis,” stated Dan Ives from Webush Securities, typically optimistic, earlier this month. In a report to their customers, J.P. Morgan highlighted “unequaled reputational harm.
Musk’s perspective on the demonstrations
Musk downplayed the demonstrations against Tesla during the conference call, attributing them to individuals upset with his oversight of the Department of Government Efficiency, stating “those benefiting from corruption want it to persist.”
However, the demonstrations across Europe, which are far removed from Washington, took place following Musk’s support.
far-right politicians
There, angry Europeans staged mock hangings of Elon Musk in Milan, displayed his image making a stiff-armed gesture onto a Tesla factory in Berlin, and posted flyers in London discouraging purchases of “Swastica-cars” from him.
Sales in Europe have plummeted by 39% during the initial quarter of this year — a sharp decline. Specifically, Germany saw sales drop dramatically by 62%.
A concerning development emerged on Tuesday when Tesla withdrew its previous commitment that sales would rebound later this year following their initial decline since 2012, which occurred in 2024. The company cited an unpredictable global trade environment as the reason and chose not to reaffirm the prediction.
Here come the rivals
In the meantime, Tesla’s rivals are poaching its customers.
Among its fiercest rivals now is Chinese giant BYD. Earlier this year, the EV maker announced it had developed an electric battery that can
charge within minutes
And Tesla’s competitors in Europe have started unveiling new models equipped with cutting-edge technology, positioning themselves as viable alternatives to Tesla. This shift coincides with growing skepticism toward Elon Musk among the public.
Tesla’s percentage of the electric vehicle market in the U.S. has decreased from
two-thirds
to
less than half
, as reported by Cox Automotive.
Pinning hopes on cybercabs
A competing firm, Google’s parent company Alphabet, is already outpacing Tesla in a sector where Musk has pledged significant advancements: autonomous taxis.
One of the standout moments during Tesla’s conference call on Tuesday was when Musk reaffirmed his earlier forecast that the company expects to achieve certain targets.
aunch driverless cabs
without steering wheels and pedals in Austin, Texas, in June, and in other cities soon after.
But Google’s service, called Waymo, already has logged
millions of driverless cybercab trips
In San Francisco, Phoenix, Los Angeles, and Austin as part of an alliance with the ridesharing frontrunner Uber.
A future without drivers for Tesla owners?
—
An autonomous tomorrow for Tesla vehicle owners?
Musk informed analysts that the self-driving feature would be accessible for Tesla cars currently in use via wireless software upgrades. He set a timeframe for this development as well: “By the latter part of this year, we expect millions of Teslas to be navigating roads autonomously.”
However, he has issued comparable pledges in the past but failed to meet his timelines, like when
April 2019
When he pledged complete automation by the end of the subsequent year, he reiterated this forecast multiple times over the coming years, each time advancing the deadline.
The main issue is that federal investigators haven’t yet confirmed that Tesla cars can operate entirely autonomously without safety concerns. Other issues persist as well.
probes
, safety regulators are looking into Tesla’s so-called Full Self-Driving, which is only partial self-driving, for
it’s tied to accidents occurring in poor visibility conditions
similar to when sunlight causes glare.
On the positive side
When competing against U.S.-based rivals, Tesla holds a distinct edge due to lower tariff impacts. This is primarily because many of its vehicles are manufactured in the same countries where they are purchased, particularly within its largest market—the United States.
“Tariffs are still tough on a company where margins are still low, but we do have localized supply chains,” Musk said Tuesday. “That puts us in a strong position.”
The firm additionally stated that a more affordable variant of its top-selling car, the Model Y SUV, would be available to buyers in the initial six months of this year. This move has the potential to enhance their sales figures.
An additional advantage: The firm experienced remarkable growth during the initial quarter within its energy storage sector. Furthermore, Musk has committed to manufacturing 5,000 Optimus robots, an aspect of Tesla’s operations, before the conclusion of this year.
Pricey stock
Despite dropping almost 50% since its peak in December, Tesla’s stock remains highly valued when considering the most important metric over the long term: its profits.
Given that it’s trading at 110 times its projected earnings per share for this year, the stock is valued over 25 times higher compared to General Motors. In contrast, the typical stock within the S&P 500 index is traded at under 20 times its earnings.
This gives Tesla very little room for mistakes if anything goes awry.
