Musk’s politics and Tesla’s performance: Are they driving the stock down?

Tesla shares seem to have gone off-road and have lost most of their gains following President Donald Trump’s November election victory. Tesla (TSLA) is down for one month, three months, and year to date, with negative returns of 25%, 12%, and 28%, respectively. Over the last one year, TSLA is still up by 40%. The 20% slump in TSLA stock in the past 5 days has left the company under $1 trillion market cap.

Many are attributing the recent decline in TSLA stock to Elon Musk’s political stances following Trump’s election. Elon Musk, the world’s richest person, has lost over $100 billion in net worth over the past decade, despite his $380 billion fortune.

Tesla’s “navigate on city streets” feature in China has been criticized by users as falling short of Musk’s self-driving technology promises, reported Reuters. Tesla has subsequently announced that it will provide updated Autopilot functionality to existing customers in China via a software update. According to the business, with this update, Tesla owners in China will be able to experience driver assistance features similar to the full self-driving (FSD) suite available in the United States.

The report from China has heightened Tesla shareholders’ anxiety, particularly regarding the company’s performance and Musk’s role in the Department of Government Efficiency, which he leads in Washington, D.C.

Musk’s extreme political rhetoric and activism have sparked protests in various markets, including at Tesla stores and service centers. Tesla’s stock fell due to Trump’s tariff plans on Canadian, Mexican, and Chinese goods. Also, Tesla sales in the EU, EFTA, and UK dropped over 45%, with over 50% in the EU alone.

One of the reasons could be competition from other EV players but Musk’s political stand could also signal bad news for his businesses. In the United Kingdom, he has often criticized Prime Minister Sir Keir Starmer and supported convicted far-right activist Stephen Yaxley-Lennon, also known as Tommy Robinson. Musk also supports the far-right AfD party in Germany, congratulating its leader on the party’s record second-place finish in elections.

Tesla shares saw a significant lift following the US election due to Musk’s strong ties to Donald Trump. Musk was a prominent supporter of Trump’s presidential campaign, donating $290 million to Republican politicians and charities in 2024, with the majority of that going toward restoring Trump to the White House.

Elon Musk has gained popularity in the US for his efforts to cut US development funds and significantly reduce US federal funding. However, his radical political views may turn away customers from the business he is in.

Also Read: Elon Musk is playing a dangerous game—and his businesses will pay price

Tesla’s performance has also not been as impressive as before. Tesla’s fourth-quarter earnings and sales fell short of analysts’ expectations, with automotive revenue down 8% year on year and operating income sliding 23%. In its late January report, the firm highlighted lower average selling prices across its aging portfolio of Model 3, Model Y, Model S, and Model X vehicles as a primary cause of the reduction.

Now, all eyes are on Tesla’s Robotaxi launch in June which could potentially boost TSLA stock.