Tesla’s reputation is under strain as Elon Musk’s leadership becomes a liability for investors, with some warning of a crisis of perception and brand damage if his focus on right-wing politics persists.
The Strained Relationship Between Elon Musk and Tesla Investors
A Liability for Some Investors
Tesla, which sells nearly half of all electric vehicles in the U.S., has long been synonymous with its founder and CEO, ‘The company’s reputation has just been destroyed by Elon Musk‘ , said Ross Gerber, a wealth manager and early Tesla investor. Gerber, who currently owns 262,000 shares of Tesla stock through his firm Gerber Kawasaki Wealth & Investment Management, added that Musk needs to either find a new CEO for Tesla or step away from his political efforts as head of the Trump administration’s Department of Government Efficiency (DOGE).
Born in Pretoria, South Africa, Elon Musk co-founded Zip2, an online content publishing software provider, which was later acquired by Compaq.
He then founded X.com, which became PayPal, and sold it to eBay for $1.5 billion.
Musk went on to found SpaceX, aiming to reduce space transportation costs, and Tesla, Inc., a leading electric vehicle manufacturer.
His innovative ventures have made him one of the most successful entrepreneurs in the world.
The Impact of Musk’s External Activities
Elon Musk owns or runs at least five companies other than Tesla. In its annual report last year, Tesla listed out Musk’s involvement in ventures like SpaceX, X, and xAI as a risk factor given that the CEO ‘does not devote his full time and attention to Tesla.’ However, none of Musk’s external activities have generated as much public backlash as his recent entry into right-wing politics.
The Musk-helmed DOGE has turned Tesla into a target for those upset at the billionaire’s growing political influence. Besides materializing in protests against Tesla dealerships and vehicles, this negative sentiment has dented Tesla’s EV sales and stock price. Tesla’s share price is down about 50 percent since its December high following Trump’s election win.
DOGE, also known as Dogecoin, is a decentralized digital currency that was created in 2013.
It was founded by Jackson Palmer and Billy Markus as a parody of the cryptocurrency craze at the time.
The coin's logo features a Shiba Inu dog, which has become an iconic symbol of the community.
DOGE uses a modified version of the Litecoin protocol and has a fast transaction processing time.
Its supply is capped at 100 billion coins, with a block reward of 10,000 DOGE per block.
A Crisis of Perception
Sales are falling in all of its key markets. Investors want a new Tesla CEO. ‘You literally can’t sell the best product in the marketplace because the CEO is so divisive,’ said Gerber. ‘It’s time for somebody to run Tesla. The business has been neglected for too long,’ added the investor, who cited DOGE as one of the reasons why he’s selling off shares.
Other notable Tesla backers appear to share Gerber’s sentiments. Christopher Tsai, an investment manager with 75,000 shares in the EV company, urged Musk to return his attention to Tesla in a recent interview with the Guardian. ‘I hope his involvement with [DOGE] is short-lived,’ said Tsai, who manages a $137 million portfolio at his firm Tsai Capital.
A Divided Public
It isn’t just investors who are upset with Musk. For some Tesla owners, the electric vehicles have turned into an unwanted political statement. ‘I bought a Tesla because it was fast like a rocket ship,’ said Senator Mark Kelly, an Arizona Democrat, in an X post earlier this week where he revealed he was selling his Tesla. ‘Every time I drive it, I feel like a rolling billboard for a man dismantling our government and hurting people,’ he added.
Tesla, Inc. is an American multinational corporation founded in 2003 by Elon Musk, Martin Eberhard, and Marc Tarpenning.
Initially focused on electric sports cars, the company has expanded to produce luxury vehicles, solar panels, and clean energy products.
Tesla's first production vehicle was the 'Tesla Roadster (2008)', followed by the 'Model S (2012)' and 'Model 3 (2017)'.
The company is known for its innovative electric powertrain technology and over-the-air software updates.
As of 2022, Tesla has become one of the world's leading electric vehicle manufacturers.
Even longtime Tesla bulls are changing their tune. Dan Ives, an analyst with Wedbush Securities, said that if Musk’s focus remains on DOGE, ‘then brand damage will become more pervasive.’ This isn’t the first time Musk’s external activities have caused a crisis for investors. After the entrepreneur acquired Twitter, now known as X, for $44 billion in 2022, Tesla shareholders urged Musk to refocus his attention to the carmaker, with Musk eventually stepping down as the platform’s CEO in 2023.
