Tesla investors breathed a sigh of relief after chief executive officer Elon Musk said he would refocus his attention on the electric automaker, but that promise did not entirely dispel worries that his involvement in Republican politics had irrevocably damaged the company’s brand.
The automaker’s shares rose nearly eight per cent on Wednesday after Musk said he would cut back his work for U.S. President Donald Trump to a day or two per week from sometime next month.
Musk acknowledged the blowback of his political activities in a conference call with analysts Tuesday but brushed off concerns that the brand damage was behind the steeper-than-expected 25 per cent decline in Tesla’s first-quarter auto sales and a 71 per cent plunge in overall net profit.
Musk’s participation in the Department of Government Efficiency, or DOGE, where he emphasized aggressive cost savings through federal job cuts has caused fierce public and political backlash, leading to a series of legal challenges, as well as protests and vandalism at Tesla showrooms.
Investors bet that would ease some pressure off the Tesla brand and give Musk more time to focus on plunging sales, which have triggered a near 50 per cent slump in the company’s stock price since its peak in December.
Tesla shares early Wednesday were trading at a much higher rate than GM, Ford and several of the biggest tech companies.
Morningstar analysts said: “We think the market was concerned Musk could be distracted from leading Tesla and potentially hurt Tesla’s brand. Musk’s decision to reduce his advisory role should alleviate these concerns.”
Musk’s time as a government adviser follows his considerable campaign efforts and spending on behalf of Trump. While some investors welcomed Musk committing more time to Tesla, experts warned the brand faces a long road to recovery, especially as political controversy continues to weigh on its image.
“Musk could do a reversal on his political career and dedicate 100 per cent of his time to Tesla, but the rot has set in,” said Sue Benson, CEO and founder of The Behaviours Agency, a marketing firm.
“No product can fix this, and no amount of time spent in Tesla’s offices will undo the new perception many people have of Musk — in fact it could make things worse as it’s far too late to separate the man from the machine.”
Front Burner23:22Elon and the Tesla backlash
Across the world an anti-Tesla campaign has been growing since Elon Musk began his work dismantling U.S. government institutions, and meddling in other country’s democracies.
The protests, dubbed “Trash Tesla,” are seeing regular folks and former customers selling their cars, dumping stock and picketing dealerships. Others are torching Tesla vehicles.
As a result the U.S. attorney general says they’re looking into the incidents as potential domestic terrorism.
Today on the show, Wired writer Carlton Reid is joining us to talk about his reporting on the Tesla backlash.
For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts [https://www.cbc.ca/radio/frontburner/transcripts]
Robotaxi launch expected
The EV maker is on track to launch an affordable car — considered a crucial avenue for future growth — in the first half of 2025, but “the ramp might be slower than we had hoped,” said Lars Moravy, Tesla’s vice-president for engineering.
Last week, Reuters reported on the delay in Tesla’s plans for an affordable car, a U.S.-made, stripped-down version of its best-selling SUV, the Model Y.
Tesla, however, said it was on track with plans to launch a robotaxi fleet in Austin, Texas, in June.
“Can you go to sleep in our cars and wake up at your destination? I’m confident that will be available in many cities in the U.S. by the end of this year,” said Musk.
While Tesla is less likely to be affected by global tariffs than legacy automakers, it still expects an outsized impact on the fast-growing energy storage business that uses battery cells from China.
Musk said he has advocated for lower tariffs but the final decision lies with Trump.
Musk’s apparent conflicts of interest leading several companies subject to government regulation have been overlooked by the second Trump administration.
Musk individually or with his companies had faced inquiries into, among other issues: alleged securities violations, questions over the safety of Tesla’s autopilot and full self-driving (FSD) systems, potential animal welfare violations in Neuralink’s brain-chip experiments and alleged hiring discrimination practices at SpaceX.
As well, since Musk in 2022 bought Twitter, now called X, the self-described “free speech absolutist” has faced criticism from hate-speech watchdogs for allowing extremist, dangerous and antisemitic comments to flourish on that social media platform.
