Trump Attributes Tesla’s Stock Decline to “Radical Leftists” and Promises to Purchase Another Tesla
After the electric car company’s stock fell over 15%, former U.S. President Donald Trump declared he would purchase a “brand-new Tesla.”
The former president attributed the drop in the stock price to “radical left-wing lunatics,” whom he accused of trying to “attack and harm” Tesla owner Elon Musk by boycotting the company.
Nevertheless, stock analysts noted that the actual cause of Tesla’s lackluster performance was its inability to meet production targets and worries about falling sales over the past year.
Market Jitters Regarding Trump’s Economic Policies
It was also pointed out by analysts that investors have been feeling uneasy about Trump’s own economic policies, especially tariffs.
U.S. markets declined on Monday as investors, concerned about the economic effects of Trump’s tariffs, began selling off shares.
This followed Trump’s suggestion of a possible recession in the U.S. by telling a television interviewer that the economy was undergoing a “transition phase.”
There are concerns among investors that Trump’s tariffs might lead to price increases and a deceleration of economic growth, as businesses transfer their higher costs onto consumers.
Tesla Shares Suffer a Blow
During the selloff, stocks of leading technology firms plummeted. Tesla’s stock dropped by 15.4%, and other tech giants—including AI chip leader Nvidia, Meta (Facebook’s parent company), Amazon, and Alphabet (Google’s parent company)—also experienced significant declines.
Tesla’s significant decline was worsened by a warning from a UBS analyst on Monday, indicating that the company’s new deliveries might not meet expectations this year.
Trump Calls on His Supporters to Support Tesla
Am Dienstag nutzte Trump seine Plattform Truth Social, um Unterstützung für Tesla zu mobilisieren. Er rief „Republikaner, Konservative und alle großartigen Amerikaner“ dazu auf, Musk beizustehen, den er dafür lobte, dass er versuche, die Zahl der Regierungsjobs zu verringern. Trotz Trumps Lob sind seine bisherigen politischen Maßnahmen darauf ausgelegt, den Verkauf von Elektrofahrzeugen (EV) einzuschränken. Dazu gehört die Rückabwicklung einer Anordnung des ehemaligen Präsidenten Joe Biden aus dem Jahr 2021, mit deren Hilfe bis 2030 die Hälfte aller Autoverkäufe Elektrofahrzeugverkäufe sein sollten. Zudem werden nicht ausgegebene Bundesmittel für Ladestationen für EVs blockiert. Auch Trumps Zölle könnten Tesla schaden. Im Januar warnte Teslas Finanzvorstand Vaibhav Taneja, dass Teile des Unternehmens aus Kanada und Mexiko neuen Abgaben unterliegen würden – dies könnte sich negativ auf die Rentabilität auswirken.
Tesla Shares Rise Following Trump’s Endorsement
Trump remarked on Tuesday that Musk was performing excellently, but he accused “radical left-wing lunatics” of attempting to carry out an illegal and intentional boycott of Tesla.
He further stated, “I will purchase a completely new Tesla tomorrow morning to demonstrate my trust and backing for Elon Musk, who is genuinely an exceptional American.”
After Trump’s remarks, Tesla shares surged by almost 5% in pre-market trading, returning to levels seen before the election.
After Trump’s election victory, Tesla’s stock had previously surged as investors speculated that Musk’s business would gain from his presidency.
Musk and His Contentious Political Views
Musk is currently at the helm of the so-called Department of Government Efficiency (DOGE), which, despite its name suggesting otherwise, is not an actual U.S. government agency.
DOGE aims to reduce federal funding, and Musk has openly endorsed far-right politics, which has attracted criticism in the U.S.
Last week, about 350 demonstrators congregated outside a Tesla dealership in Portland, Oregon, and earlier in March, nine protesters were detained outside a Tesla dealership in New York City.
The Bigger Picture: Tesla’s Challenges Beyond Politics
Linsay James, who works as an investment strategist at Quilter Investors, recognized that Musk’s political views affect the brand. However, she noted that there are more profound reasons for Tesla’s stock decline.
“In the end, the decline comes down to cold hard figures,” she explained.
“Examining new orders, particularly in Europe and China, reveals that they have essentially halved in comparison to the previous year.”
There has been a considerable decline in sales across Europe. The European Automobile Manufacturers Association (ACEA) reported that Tesla’s sales throughout the continent decreased by 45% in January 2024 compared to the same month of the previous year.
China—an essential market—and Australia have also experienced significant downturns.
Competitive Strain and Market Deceleration
Some experts think that Tesla’s stock was overvalued, and thus this decline is a natural correction. Some highlight the growing rivalry posed by Chinese electric vehicle makers.
There is also a growing concern among investors regarding an economic slowdown, which typically affects high-value companies such as Tesla the most.
Moreover, worries have arisen that Musk may not be fully focused on his main ventures.
Musk acknowledged during a Monday interview with Fox Business that he was having difficulty managing his corporate duties alongside his role at DOGE.
Apart from Tesla, Musk’s businesses encompass SpaceX—which has recently experienced significant failures in two launches of its colossal Starship rocket—and the social media platform X, which encountered outages on Monday.
Investors Worry About Musk’s Divided Attention
As Musk’s responsibilities continue to accumulate, investors are voicing worries that he might not be able to devote sufficient time to Tesla.
His leadership has grown to encompass ventures such as X (previously Twitter), Neuralink, and The Boring Company, in addition to Tesla and SpaceX, over the past few years. His engagement in political activities and initiatives aimed at enhancing government efficiency under DOGE has intensified the perception of him being overstretched.
This view has been bolstered by Tesla’s recent difficulties, which include sales numbers that did not meet expectations and a growing rivalry in the electric vehicle sector.
The Worldwide Electric Vehicle Market and Tesla’s Challenges
The worldwide electric vehicle sector is developing at a swift pace, and Tesla is encountering increasing competition, especially from rivals in China. Firms such as BYD have made considerable progress, providing more affordable and technologically superior electric vehicles.
Moreover, car manufacturers from Europe such as Volkswagen and BMW have increased their output of electric vehicles, which has affected Tesla’s market share.
In the U.S., established car manufacturers like Ford and General Motors have made bold advances into the electric vehicle sector, using their existing dealer networks and government incentives to draw in customers.
Trump’s Influence on Tesla’s Prospects
Trump has been vocal in his support of Musk, but his policies could complicate matters for Tesla.
As an illustration, should Trump implement higher tariffs on Chinese products as promised, this could lead to a further increase in the costs of EV batteries and other essential parts. Tesla, which obtains some materials from China, could experience price pressures as a result.
Furthermore, the dismantling of electric vehicle incentives and infrastructure investments from the Biden administration under Trump could hinder the uptake of electric vehicles in the U.S., thereby having an indirect impact on Tesla’s long-term growth outlook.
Musk’s Engagement in Politics: A Double-Edged Sword
Musk has garnered support from conservative figures such as Trump, but his engagement in politics has also distanced some investors and customers of Tesla.
A large share of Tesla’s initial adopters consisted of consumers with environmental awareness who backed electric vehicles as a way to fight climate change. A number of these customers have voiced their dissatisfaction regarding Musk’s alignment with right-wing politics and his critiques of government climate policies.
Tesla’s Future Path
While steering through these difficulties, Tesla must concentrate on restoring investor confidence and stabilizing its production and sales processes.
The essential questions for Musk are still:
Is he able to manage his various business ventures without overlooking Tesla?
Will Trump’s policies ultimately benefit or harm Tesla in the long run?
Will Tesla be able to keep its competitive advantage in the growing EV market?
The 2024 U.S. presidential election is drawing near, and the stakes are significant for Trump and Musk as well as for Tesla’s future and the global electric vehicle sector.
