Is Elon Musk’s Political Involvement Threatening Tesla and His Business Empire?

Investors Question the Tech Billionaire’s Role in Trump’s Administration as Tesla’s Stock Plummets

Elon Musk’s political maneuvers may have backfired in dramatic fashion. On Tuesday (11), U.S. President Donald Trump posed with the Tesla CEO and a red Tesla Model S outside the White House, declaring that he was purchasing the electric car for his staff at full price.

This unprecedented endorsement follows growing concerns over Musk’s increasing involvement in both American and global politics—especially his support for far-right parties in Europe—while Tesla's stock has suffered a massive drop in market value.

The fact that Musk sought Trump’s public support suggests that consumer protests, boycotts, and even reported sabotage incidents against Tesla vehicles, charging stations, and factories have unsettled the world’s richest man and alarmed investors. Trump condemned these incidents, labeling them acts of “domestic terrorism.”

Is Politics to Blame for Tesla’s Declining Sales?

Tesla’s sales slump has intensified scrutiny. In Germany—where Musk used his social media platform X to support the far-right Alternative for Germany (AfD) party ahead of last month’s elections—Tesla’s sales plummeted by 76% in February compared to the previous year, even as overall electric vehicle (EV) sales grew by nearly a third.

Similar trends are emerging elsewhere, including France, where Tesla’s sales fell by nearly 45% in the first two months of the year. In Australia, sales have dropped by over a third since Trump’s reelection.

In California, Tesla’s largest U.S. market, sales have declined for the fifth consecutive quarter, according to the California New Car Dealers Association (CNCDA). In 2024 alone, Tesla registrations in the state fell by 11.6%.

Consumers appear to be distancing themselves from Musk’s EV brand amid allegations of political interference and his close relationship with Trump. Many Tesla owners have even placed stickers on their cars protesting Musk’s political shift, with slogans like “Vintage Tesla – Pre-Crazy Edition” and “I Bought This Car Before Elon Lost It.”

“Musk thinks he can say whatever he wants without Tesla facing any consequences,” said Seth Goldstein, an analyst at Morningstar, to the Associated Press last week. “Tesla was in a sweet spot. Now, it has serious competition.”

A recent Strategic Vision survey asked Americans to name their favorite vehicle, and while both Republican and Democratic voters preferred EVs over gasoline-powered models, none of them chose a Tesla.

Daniel A. Crane, a law professor at the University of Michigan and author of an upcoming book on Tesla, noted that the automaker was previously “strongly identified with environmental concerns” and that Tesla drivers “leaned left politically.”

“In the last two years, Musk has effectively burned his bridges with those interest groups,” Crane told DW. “Additionally, with several other EV options now available—from startups like Rivian and Lucid to legacy automakers—climate-conscious buyers no longer need to purchase a Tesla.”

Crane added that while Musk may hope to replace those lost customers with Trump supporters, “MAGA folks tend to be the most skeptical of EVs.”

Stock Plunge and Political Entanglements

The fierce competition in the EV market has sparked a Tesla stock sell-off. Over the past three months, Tesla’s shares have nearly halved in value. In the same period, Musk has lost $144 billion as investor skepticism grows over Tesla’s self-driving technology and artificial intelligence (AI) ambitions.

Tesla’s valuation peaked at over $1.5 trillion following the U.S. presidential election, but on Monday (10), the company’s stock dropped 15% amid broader market fears of an impending U.S. recession.

Musk donated $250 million to Trump’s campaign and has since taken on the role of the administration’s chief advisor for cutting government waste through the Department of Government Efficiency (Doge).

Growing Backlash Over Musk’s Role in Doge

Protests under the banner “Tesla Takedown” have erupted at dealerships across the U.S., targeting Musk’s involvement in Doge, which has so far canceled approximately $60 billion in public sector contracts, including humanitarian aid programs.

Americans are witnessing “an extraordinary centralization of power in someone who lacks high-level security clearance and has not undergone Senate confirmation,” Don Moynihan, a professor at the University of Michigan’s Ford School of Public Policy, told Reuters last month.

Moynihan warned that Musk’s access to confidential government data without proper oversight is “concerning” and “unprecedented.”

Musk’s Other Ventures Continue to Thrive

Beyond Tesla, Musk owns SpaceX, Neuralink, xAI (which created the Grok chatbot), the social media platform X (formerly Twitter), and The Boring Company. Unlike Tesla, these businesses are privately held but are still traded on secondary markets.

Bloomberg reported on Wednesday (12) that while Tesla’s valuation has plummeted, the collective worth of four of Musk’s private companies has surged by 45% since the election, citing analysis from trading platform Caplight. xAI’s stock price, for instance, has soared 110% since November 5.

Musk’s businesses also hold between $18 billion and $22 billion in federal government contracts, according to U.S. media reports. However, many of these deals remain classified, raising concerns about conflicts of interest in his Doge role.

Is Musk’s Reign at Tesla Ending?

Last month, New York City Comptroller Brad Lander—who oversees pension funds holding $1.25 billion in Tesla shares—told the New York Times that Musk should step down as Tesla’s CEO but remain on the board to restore “basic corporate governance.”

While Musk has publicly stated that his Doge involvement will likely last another year, even one of Tesla’s staunchest Wall Street supporters, Dan Ives, now believes he should walk away from Trump’s administration.

“The clock has struck midnight for Musk and Doge. He needs to refocus on being Tesla’s CEO,” Ives, head of global tech research at Wedbush Securities, told DW. “Balance is key, and that’s what Musk must find to stop Tesla’s stock from bleeding.”

A recent Morgan Stanley survey, published on Wednesday (12), found that 85% of investors believe Musk’s political involvement has had a “negative” or “extremely negative” impact on Tesla’s business.

Musk himself admitted struggling to juggle his many responsibilities, telling Fox Business on Monday that he was managing his ventures “with great difficulty.”

Despite this, he appears to be doubling down on his support for Trump. The New York Times reported on Wednesday that Musk is planning to inject another $100 million into pro-Trump political groups.

According to the report, such a donation is “unprecedented” for a White House official.

As he stood beside Trump and a fleet of Tesla vehicles at the White House on Tuesday, Musk told reporters he would remain in Washington as long as he was useful but intended to stay on as Tesla’s CEO.