The Economist: Elon Musk’s antics are not the only problem for Tesla

Key topics.Tesla's sales and stock price are declining despite Trump's endorsement.Musk's political ties spark backlash, protests, and falling sales in key markets.Tesla's limited model lineup and competition worsen its market struggles..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here..If you prefer WhatsApp for updates, sign up to the BizNews channel here..From The Economist, published under licence. The original article can be found on www.economist.com.© 2025 The Economist Newspaper Limited. All rights reserved..The Economist___STEADY_PAYWALL___.The carmaker's sales are sinking for other reasons too.Friends help each other out. Tesla's boss, Elon Musk, may well have been grateful when Donald Trump said he would buy one of its electric vehicles (EVs) on March 11th. Yet that was the least the president could do for his bureaucracy-basher-in-chief. The day before, Mr Trump had helped bring on a fall of over 15% in Tesla's share price, amid a wider sell-off sparked by his trade policies and his warning that America's economy faced a "period of transition". The subsequent Trumpian endorsement will not be enough to apply the brakes to Tesla's declining sales and slumping share price..Mr Musk's backing for Mr Trump's second presidential run once looked like a clever business move. His reward was to run the Department of Government Efficiency (DOGE), boosting what Barclays, a bank, calls the "Elon premium". Investors clearly thought that his political sway would do Tesla good. Its market value hit a record $1.5trn in December (see chart)..Chart: The Economist.Since then his closeness to Mr Trump and support for far-right causes have prompted a backlash. Protests against Mr Musk's role at the heart of the administration and doge's mass firings of civil servants have gathered steam in America. Picketing of Tesla showrooms has turned ugly, with windows smashed and vehicles vandalised; a Tesla charging station was attacked by arsonists. Outside America, Mr Musk's actions have also provoked protests against the carmaker. So closely are the man and brand intertwined that embarrassed owners are resorting to anti-Musk bumper-stickers to distance themselves from him..But Mr Musk's politics only partially explains Tesla's troubles. Sales were falling before he took a chainsaw to America's public sector. Last year Tesla dropped a long-standing aim to be making 20m cars annually by 2030 and reported its first decline in annual sales for many years—a fall of 1%, to 1.79m cars..Sales have continued to fall in recent months compared with a year before, at a time when the EV market overall is still growing. Barclays estimates that first-quarter sales in Europe could be down by around 30%. In Germany, where Mr Musk caused an uproar by supporting a far-right party in recent elections, sales fell by 76% in February, year on year..Yet Barclays reckons that first-quarter sales in America, where antipathy to Mr Musk seems highest, will be flat. Sales in China also fell by nearly 14% in January and February, but a political backlash is an unlikely explanation; Mr Musk is generally regarded as pro-China. In Britain, where his political meddling should be a factor, Tesla sales actually increased by almost 21% in February..This suggests that a reaction from consumers who dislike Mr Musk's antics are only one reason for falling sales. An updated Model Y, Tesla's best-selling vehicle, has just gone on sale. In preparation Tesla ran down inventory of the old model, crimping supply. Customers doubtless held off purchases until the new car was available..The bigger problem, though, is that Tesla has become what Philippe Houchois of Jefferies, an investment bank, calls a "reluctant carmaker". It relies for the bulk of its sales on two models, the 3 and the Y, whereas global giants such as Toyota have many more to satisfy all parts of the market. In October Mr Musk decided against launching a cheaper "Model 2", instead switching focus to robotaxis and humanoid robots. Meanwhile the competition from established carmakers and Chinese newcomers is heating up..Tesla's valuation has long lost any connection with fundamentals, and is more a bet on Mr Musk's ability to revolutionise any business he turns his hand to. He now claims that robotaxis and robots will make Tesla the "most valuable company in the world by far"..That hints at another explanation for Tesla's plunging share price: Mr Musk spreading himself ever thinner. In an interview with Fox News on March 10th he noted the "great difficulty" he faced running Tesla and his other firms while working for the government. As Mr Trump inspected his potential new purchase outside the White House, he chastised protesters for "harming a great American company". Yet much of the blame for that lies with his buddy, Mr Musk..Read also:.🔒 The Economist: China's super-smart Tesla-killers🔒 FT: Tesla stock is falling because Elon Musk's stock is falling🔒 Musk's image falters as Tesla struggles in China

The Economist: Elon Musk’s antics are not the only problem for Tesla

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