While Elon Musk divides public opinion and investors, Tesla must navigate an increasingly hostile environment amid tariffs, new rivals, and a transforming industry.
The Rise of a Tech Giant and Its Polarizing Visionary
In recent years, Tesla has undergone an unprecedented evolution in the technology and electric mobility sectors. The American tech company’s rapid ascent has always been intertwined with the personality and the decisions of its CEO and founder, Elon Musk. However, Musk’s leadership has proven to be a double-edged sword. On one hand, his vision has established Tesla as an industry giant; on the other, his growing political activism has created fractures in public opinion and among investors, threatening the brand’s stability.
In the last months, Musk has become an increasingly polarizing figure. His controversial statements on political and social issues have negatively impacted the brand’s perception. According to a recent survey among Tesla investors, 85% of respondents believe that Musk’s political positions have harmed the company. Moreover, customer loyalty is dropping in traditionally progressive U.S. states, especially those key to the electric car market like California. According to S&P Global Mobility data, the percentage of Tesla buyers who choose the brand again when purchasing a new car dropped from 72% in 2023 to 65% in 2024 in the so-called “blue states”, which have voted for the Democratic candidate in the last four presidential elections. Conversely, in Republican states, customer loyalty has remained stable during the same period.
New Tariffs and Mounting Competition Compound Strategic Uncertainty
The effects of the entrepreneur’s extremism have been even more evident in Europe. The brand’s European sales have plummeted, especially after Musk announced his support for the German far-right party Alternative für Deutschland. In Norway, one of the key markets for the electric vehicle sector, sales fell by 37.9%, in France by 63.4%, and in Spain by a staggering 75.4%. In Germany, protests at Tesla factories have become frequent and widespread. Tesla dealerships and car owners are facing regular boycotts and acts of vandalism. All these developments are eroding Tesla’s market power, calling its status as a premium brand into question.
In an increasingly uncertain geopolitical and economic landscape, the shifting public perception of the brand is just one of the challenges Tesla must face to maintain its dominant market position. Firstly, the new tariffs introduced by the Trump administration on Chinese imports could significantly increase Tesla’s production costs. In addition, the Tycoon has announced specific tariffs on imported cars and components, including engines, transmissions, and electronic parts. These tariffs could severely affect Tesla’s business strategies.
These challenges also arise in an increasingly complex competitive landscape. In the same year that Tesla recorded a decline in vehicle deliveries for the first time since 2011, China’s leading electric car manufacturer, BYD, exceeded market expectations by about 20%. This result comes from several factors. First, BYD cut costs significantly through vertical integration and tight supply chain control. Moreover, they produce their batteries in-house, lowering dependency and boosting efficiency. Meanwhile, the major European and Asian competitors (such as Mercedes, BMW, Honda, and Toyota) announced “Ionna”, a rival charging initiative. Their goal is to build 30,000 US charging stations by 2030, directly challenging Tesla’s lead in this space.
Can Tesla Reinvent Itself Beyond Musk?
In such a complex geo-economic context, will Tesla manage to break free from the shadow of its founder and build a solid and independent leadership? The answer to this question could be crucial for the company’s ability to navigate the economic and political challenges of the coming years.
Sources:
What Tesla’s tarnish tells us about America Inc.
Donald Trump to impose 25% tariff on car imports.
Tesla sales fall sharply in Europe despite upswing in electric vehicle market.
Tesla, Elon Musk è diventato un problema in Europa.