Why Our Pension Fund Is Halting Investments in Tesla | Opinion
When I was elected as the controller of Lehigh County in Pennsylvania, one of my key responsibilities was to join a seven-person board of trustees that oversees the county’s $500 million pension fund. As a pension fund trustee, I have a legal duty to act as a responsible steward of the retirement savings of 4,218 county retirees and employees. It is in this capacity that our board has decided to halt new investments in Tesla.
Since Elon Musk took over at the helm of the Department of Government Efficiency (DOGE), Tesla’s reputation has suffered badly. The company has been hit with a wave of negative press, mass and sustained protests, boycotts, and calls for divestment. This is having a material impact. In a recent earnings call, Tesla announced its profits in the first quarter of 2025 were down 71 percent. However, the signs that Tesla was struggling were evident before the most recent earnings calls.
Elon Musk speaks in the Oval Office of the White House in Washington, D.C., on February 11, 2025.
JIM WATSON/AFP via Getty Images
Where once Tesla was the only major player in the electric vehicle (EV) field, it’s now a highly competitive market. While Tesla sales were down 1.1 percent in 2024, General Motors’ EV sales jumped 50 percent. And that was before Musk put Tesla’s reputation through the woodchipper. In the first quarter of 2025, total EV sales in the U.S. were up 11.4 percent from the previous year, but Tesla sales were down 13.1 percent. Tesla sales have also been down across Europe, as backlash to Musk’s interventions in foreign elections has grown.
In China, the world’s largest car market and a country in which Tesla has invested heavily, sales of all-electric BYDs increased 41.3 percent in 2024, a trend that is expected to continue now that BYD has beaten Tesla to the punch by inventing an electric vehicle that can recharge its battery in under five minutes, or roughly the time it takes to fill a car with gas.
All of this helps explain why Tesla has one of the worst price-to-earning ratios of any company in the S&P 500. Measuring the ratio of a company’s stock price to the company’s earnings per share, price-to-earnings ratio is a method commonly used for assessing whether a company is overvalued.
Currently, Tesla’s price-to-earnings ratio is around 160. That means investors are paying $160 for every $1 in profits that Tesla produces. In the auto industry, the average price-to-earnings ratio is closer to 7:1. This indicates that Tesla’s stock is potentially overvalued.
Why would Tesla’s stock still be valued so highly in the midst of declining sales and reputational carnage? The Economist explained that it’s because “Tesla’s valuation has long lost any connection with fundamentals and is more a bet on Mr Musk’s ability to revolutionize any business that he turns his hand to.”
In the case of Tesla, that is largely a bet on the company conquering the market for robots and autonomous taxis. But Tesla has been promising robotaxis for a decade and has yet to launch a public service. Meanwhile, Waymo, a subsidiary of Google, already has 700 driverless taxis on the road in San Francisco, Los Angeles, and Phoenix. The debacle of the Cybertruck should also call discerning investors to question Musk’s supposedly mercurial abilities.
Its first new vehicle in four years, the Cybertruck was supposed to be Tesla’s next big thing. But with a mere 46,000 vehicles sold in the 18 months following its launch, many analysts are calling sales a disaster for the company. Embarrassingly, the Cybertruck has been subjected to eight recalls, most recently for an issue with a glue that wasn’t properly holding a side panel in place. If Tesla can’t figure out how to keep a side panel glued on, should we believe they’re ready to launch robotaxis?
Lehigh County is far from the only institutional investor expressing concerns. In January, the Dutch pension fund, ABP, sold its $600 million stake in Tesla; in March, the $20 billion Danish pension fund, AkademikerPension, divested its shares due to reputational risks linked to Musk’s political activity. In the U.S., eight State Treasurers have written an open letter to the Tesla board, expressing concerns about Musk’s management of the company.
Full divestment from Tesla for institutional investors can be a complicated endeavor. For now, Lehigh County has only paused investments in our actively managed funds and asked our investment manager to prepare options for divesting the company from our passively invested funds, which are largely tied up in index funds and mutual funds. It’s too early to say what our investment manager will advise, and as a responsible fiduciary, we will be guided by what they tell us.
However, it’s not too early to see the negative impacts that Elon Musk’s political activity is having on Tesla. The company has clearly reached a fork in the road. Tesla’s institutional investors and its board members should act accordingly.
Mark Pinsley is Lehigh County controller.
The views expressed in this article are the writer’s own.