According to news on March 13, Tesla investors’ concerns are not unreasonable, because the company’s CEO Elon Musk’s strategy relies on groups from which he is gradually alienating, making it more difficult for him to realize his vision of autonomous taxis (Robotaxi).
On Tuesday local time, U.S. President Donald Trump said he would buy a new Tesla "to show confidence in the company." The day before, Tesla's stock price plummeted more than 15%, recording its largest single-day decline since September 2020. The sell-off stemmed in part from negative sentiment toward Musk and his cost-cutting plans at the Department of Government Efficiency (DOGE). Trump's statement was undoubtedly a goodwill gesture, even though he is legally prohibited from driving on public roads again.
That being said, the Former Presidents Act passed in 1958 does not seem to contemplate the possibility of self-driving cars in the future, perhaps because Trump wants his Tesla to drive itself.
Even better, Trump could rent the car for use on Musk's touted self-driving taxi network. Musk has promised to launch the service in multiple U.S. markets this year, with plans to launch in Austin, Texas, in June. Austin is a city where 69% of voters voted for Kamala Harris.
This may not have mattered before, but it is very different now. Musk's increasingly tarnished reputation is a high-alarm crisis for investors, who believe Tesla's value lies in its self-driving taxi strategy.
Musk’s support for Trump has turned Tesla into a “MAGA (Make America Great Again)” red hat on wheels. In online communities, anxious posts from Tesla owners indicate they feel targeted. "Your car makes you look like a Nazi supporter," read one note found by a Chicago Tesla owner. In lower Manhattan, a Cybertruck was spray-painted with swastikas and another was jeered by crowds during Mardi Gras.
No wonder the best-selling car sticker on Amazon now reads: “IboughtthisbeforeweknewElonwascrazy.”
There has been a wave of organized and coordinated "Destroy Tesla" protests across the United States. Trump said he would treat the attacks as domestic terrorism. Musk, who calls himself a defender of free speech, accused the organizers of committing a crime. He and other Republicans suggested, without evidence, that the protesters were funded by the "mastermind" George Soros.
What worries investors is that sales of Tesla cars have plummeted in Germany and other places. Musk's meddling in German domestic politics appears to have caused sales to plummet 76% in February, even as overall electric car registrations rose 31% during the same period.
Even Dan Ives of Wedbush Securities, one of Wall Street's most bullish analysts, acknowledged that investors' patience is "slowly running out" as Musk and Trump become "inseparable." However, Ives still believes that Tesla will tide over the difficulties thanks to the new Model Y and its autonomous driving plan.
But there are many people who think differently. About half of Americans now view Musk unfavorably, according to the Pew Research Center. Unfortunately, this half of the population is typically the group that will buy Tesla cars and is the group that Musk relies on to drive his self-driving taxi strategy. For the foreseeable future, self-driving fleets will only be feasible in dense urban environments and among wealthy consumers. After Austin, Tesla plans to bring self-driving taxis to a city in California (although the company has yet to receive a permit).
A survey of 250,000 U.S. car buyers by market research firm Strategic Vision showed that people's favorability towards Tesla is declining sharply. In 2022, before Musk acquired Twitter, 22% of respondents said they would "definitely consider" buying a Tesla car in the future. After he acquired the social platform, that dropped to 16%. By the end of last year, this proportion was only 8%.
In the past, Democrats purchased Tesla at about twice the rate of Republicans, but now that ratio has dropped to 1:1. This is not an increase in conservative purchases, but a sharp decline in Tesla sales among left-wing groups.
Of course, the decision to buy a car is clearly bigger than hailing a self-driving taxi, but consumer sentiment remains crucial. Alexander Edwards, president of Strategic Vision, said: "Cars allow individuals to say: 'This is me and these are the values I stand for.' Tesla must recognize that the Tesla brand is in crisis."
Even ignoring image issues, Musk's promises about autonomous driving have long seemed unrealistic. Tesla has not disclosed any unsupervised self-driving tests on public roads. Musk has chosen a cheaper "vision" approach that many experts believe falls short of safety compared to technology used by companies like Waymo. U.S. safety regulators have previously harshly rebuked Tesla, saying it exaggerated the capabilities of its assisted-driving technology Autopilot.
If we think public sentiment toward Musk has hit rock bottom, it will only worsen when his self-driving cars start blocking traffic, going the wrong way, or worse. Waymo’s success—at least 53 million test miles, including highways—has been driven by effective community engagement, a diplomacy that Musk seems particularly averse to.
Tesla shares had risen on Musk's close relationship with the Trump administration, which investors believed would clear regulatory hurdles for its self-driving plans. What they didn't anticipate, however, was the public backlash this strategy would face: The public simply didn't buy it.