Musk's haters aren't Tesla's only problem.

Friends help each other. Tesla owner Elon Musk may have been grateful when Donald Trump said he would buy one of his electric vehicles on March 11. However, it was the least the president could do for his scourge-in-chief against bureaucracy. The day before, Trump had helped cause Tesla's stock price to drop more than 15% amid a broader sell-off triggered by his trade policies and his warning that the US economy was facing a "transition period." The Trumpian endorsement The subsequent fall was not enough to stem the decline in car sales and Tesla's stock price.

Musk's support for Trump's second presidential bid seemed like a smart business move. His reward was running the Department of Government Efficiency (DOGE). Investors believed his political influence would benefit Tesla. Its market value hit a record $1.5 trillion in December.

Since then, his proximity to Trump and his support for far-right causes have sparked a backlash. Protests against Musk's role at the heart of the administration and the mass layoffs of civil servants have gained momentum in the United States. Pickets have been set up at Tesla dealerships, with windows smashed and vehicles vandalized; a Tesla charging station was also attacked. Outside the United States, Musk's actions have also sparked protests against the carmaker. The man and the brand are so closely intertwined that embarrassed owners are resorting to anti-Musk bumper stickers to distance themselves from him.

Other causes

But Musk's behavior only partially explains Tesla's problems. Sales were already falling before he took a chainsaw to the US public sector. Last year, Tesla abandoned its long-held goal of manufacturing 20 million cars annually by 2030 and recorded its first decline in annual sales in many years: a 1% drop to 1.79 million cars.

Sales have continued to decline in recent months, at a time when the electric vehicle market is generally still growing. Barclays estimates that first-quarter sales in Europe could be down around 30%. In Germany, where Musk sparked controversy by supporting a far-right party in the last election, sales fell 76% year-over-year in February.

However, Barclays sees first-quarter sales in the US, where antipathy toward Musk appears to be greatest, ending flat. Sales in China also fell nearly 14% in January and February, but this is unlikely to be a political backlash. Musk is generally seen as pro-China. In Britain, where his political meddling should also be a major factor, Tesla sales rose nearly 21% in February.

This suggests that consumer reaction to Musk's antics is only one reason for the sales slump. A new version of the Model Y, Tesla's best-selling vehicle, has just gone on sale. Customers have undoubtedly held off buying until the new car is available.

The bigger problem, however, is that Tesla has become what Philippe Houchois of Jefferies, an investment bank, calls a "reluctant automaker." The bulk of its sales are based on two Models, the 3 and the Y, while global giants like Toyota have many more to satisfy all market niches. In October, Musk decided not to launch a cheaper Model 2; instead, he focused on robotaxis and humanoid robots. Meanwhile, competition from established automakers and Chinese newcomers is increasing.

Tesla's valuation has long since lost any connection to fundamentals and is more a bet on Musk's ability to revolutionize any business he runs. He now claims that robotaxis and robots will make Tesla the "most valuable company in the world by far."

This may be another explanation for Tesla's falling stock price. In a March 10 interview on Fox News, he spoke of the "great difficulties" he had running Tesla and his other companies while working for the government. Trump has lashed out at protesters ranchers Tesla for "harming a great American company." However, much of the blame for that damage lies with his friend, Mr. Musk.