Tesla has long been a leading player in the electric vehicle (EV) industry, with its sleek designs and innovative technology pushing the boundaries of the automotive world. The company’s CEO, Elon Musk, is perhaps one of the most high-profile figures in the business world, known for his eccentric persona and bold vision.
However, Tesla's position is becoming more precarious, as recent events have placed the company at the center of mounting public and political controversy. Musk's personal views, particularly his involvement in U.S. government policies and his outspoken political stances, are starting to have a tangible effect on Tesla's brand and bottom line.
This, coupled with challenges stemming from increased competition and slowing sales, is raising questions about Tesla's future and whether it can maintain its dominant position in the EV market.
Ben Kilbey, an electric vehicle enthusiast and communications professional based in the UK, illustrates the growing dissatisfaction among some Tesla owners with Musk’s leadership. He has owned a Tesla Model Y for three years and describes the car as “an absolute dream.”
However, Ben recently decided to sell his vehicle due to Musk’s controversial actions, particularly his handling of the firing of U.S. government employees. “I’m not a fan of polarization, or of doing things without kindness,” Ben remarked, explaining that Musk’s approach to leadership no longer aligns with his own values.
Ben’s disillusionment is far from isolated. A broader backlash against Musk has been growing, particularly since he took a controversial position as head of the Department for Government Efficiency (DOGE), an entity tasked with cutting federal spending. Musk’s political involvement has not been limited to domestic affairs—he has also waded into European politics.
In Germany, Musk appeared at a rally for the far-right party Alternative für Deutschland, and he has taken to social media to criticize politicians, including British Prime Minister Keir Starmer. These actions have sparked protests outside Tesla showrooms, not just in the U.S., but across the globe, including in Canada, the UK, Germany, and Portugal.
While many of the protests have been peaceful, instances of vandalism, including vehicle fires and damage to showrooms, have been reported.
Musk’s controversial stance and political activism have clearly impacted Tesla’s public image. Despite the brand’s historic success, recent months have shown signs of struggle, with sales figures in key markets like Europe and the U.S. beginning to decline.
In 2023, Tesla's total sales fell slightly for the first time in over a decade, with figures dipping from 1.81 million units to 1.79 million. This decrease, although small, is significant for a company that has built its reputation on consistent growth.
Furthermore, the drop in Tesla’s stock price has been substantial, with a 15% decrease in a single day following analyst predictions that Tesla’s sales would decline by 5% in 2024.
In addition to these concerns, Tesla is facing increasing competition from both traditional automakers and new entrants to the EV market, particularly from China. Companies like Kia and Hyundai have made significant investments in EVs, gaining a reputation for producing high-quality battery-powered vehicles.
Meanwhile, Chinese brands like BYD, Xpeng, and Nio have quickly expanded their reach, offering cars with impressive performance at competitive prices. BYD, in particular, has developed a rapid-charging system capable of delivering 250 miles of range in just five minutes, which could pose a serious challenge to Tesla’s Supercharger network.
Tesla’s traditional market advantage in terms of product innovation is beginning to fade. Once considered cutting-edge, models like the Tesla Model S and Model X have been on the market for years, with the Model S debuting in 2012 and the Model X in 2015. Even the more recent Model 3 and Model Y, while still highly regarded, are starting to look dated in comparison to newer offerings from competitors.
The lack of fresh, innovative models is a growing concern for analysts and industry insiders. According to experts like Stephanie Valdez Streaty of Cox Automotive, “There’s so much more competition out there,” and Tesla’s product lineup is no longer as compelling as it once was.
Tesla’s focus on autonomous driving and robotaxis, an area Musk has championed, also raises concerns. Musk has been promising for years that Tesla would soon have a fleet of robotaxis, but these plans have yet to materialize.
In a 2019 earnings call, Musk claimed that a million Teslas would be on the road as robotaxis within a year, yet these cars are still reliant on human drivers for oversight. Musk’s repeated promises about autonomous vehicles have led to skepticism in the industry, with some critics arguing that the technology is further off than he admits.
Beyond the challenges in product innovation and competition, Musk’s personal involvement in a variety of ventures—including his social media platform X (formerly Twitter), SpaceX, and the artificial intelligence company xAI—has raised concerns about his ability to effectively manage Tesla. With so many responsibilities, some analysts question whether Musk is fully committed to overseeing Tesla’s operations.
Professor Peter Wells from Cardiff University’s Centre for Automotive Industry Research pointed out that Tesla needs “someone with a hands-on, 100% commitment” to guide the company through its current challenges.
Despite these issues, Musk remains Tesla’s largest shareholder, with a 13% stake in the company, valued at over $95 billion. This means that he still holds significant influence over the company’s direction. However, calls for a change at the top are becoming more frequent, with some investors and industry experts arguing that Tesla could benefit from new leadership.
Matthias Schmidt, an automotive analyst, believes that a new CEO could help address Tesla’s current struggles, particularly by offering fresh perspectives on product development and international competition.
For many investors, the recent drop in Tesla’s stock price is concerning, but it is worth noting that Tesla is still valued at more than 100 times its earnings—a much higher ratio than its competitors like Ford, General Motors, or Toyota. This suggests that investors are still betting on Tesla’s long-term growth and technological breakthroughs.
However, as competition heats up and Musk’s personal controversies continue to unfold, it remains to be seen whether Tesla can continue to dominate the EV market.
