Elon Musk's outsized role in the Trump administration is taking a toll on Tesla, according to an investor in the electric vehicle company that Musk has led since 2008.
Facing a global sales downturn, Tesla lost its trillion-dollar market cap status last month, with shares declining 28% in February. It marked Tesla's second-worst month on record, surpassed only by its 37% decline in December 2022.
"For the first time in Tesla's history, sales last year didn't beat sales the year before," said Ross Gerber, who was an early supporter of Musk before becoming a recent critic. "Now this is still a growth company with a huge growth multiple, and yet it's not growing."
Gerber, president and CEO of Gerber Kawasaki Wealth & Investment Management, sold $60 million of Tesla shares last year and owned approximately 262,000 shares at the end of 2024.
Musk's so-called Department of Government Efficiency and his chainsaw approach to gutting the government has angered Tesla's traditionally liberal base of car buyers. At least 58 protest events are planned this week around the U.S., according to the Tesla Takedown page of the Action Network platform, as consumers mobilize to voice their dissatisfaction.
In the Washington, D.C. neighborhood of Georgetown, demonstrators carried signs reading, "No one voted for the Muskrat" and "Musk Robbing America," the Washington Post reported. A chalk message on the sidewalk asked: "You want a swasticar?"
Musk, the world's richest person, spent over $250 million to elect Trump and other Republican candidates in 2024. Musk's DOGE has been cutting thousands of federal workers, dismantling the U.S. Agency for International Development and seeking access to payment systems that officials say contain citizens' private data.
In Europe, where Musk's embrace of right-wing politics also has spurred blowback, new Tesla registrations fell 45% year-on-year in January, even as overall electric vehicle sales grew by 37%.
Tesla’s branding issue
The pressure on car sales is not limited to Tesla; the entire auto industry is facing headwinds. S&P analysts predict this year will be "ultra-challenging" for automakers, with the EV sector particularly affected.
"A key concern is how 'natural' EV demand fares as governments rethink policy support, especially incentives and subsidies, industrial policy, tariffs" and other changing dynamics for electric car makers, according to Colin Couchman, executive director of global light vehicle forecasting for S&P Global Mobility.
But Tesla's marketing strategy, or lack thereof, is exacerbating the problem, according to Gerber.
"Companies spend billions of dollars a year on marketing, which Tesla doesn't do: The fundamental strategy of Tesla was that Elon was so likable,” Gerber said. “But when you're driving up with Trump to meet with Putin, it's the worst advertising — and that's the problem."
For nearly a decade, Musk has promised that Tesla would deliver fully self-driving vehicles. Recently, Musk has intensified his focus on autonomous technology.
During Tesla's Q4 2024 earnings call in late January, Musk promised that Tesla would roll out "autonomous ride-hailing for money" by June of this year in Texas, as reported by Reuters.
Gerber remains skeptical, noting that full self-driving mode remains a work in progress.
"You can spin that and pretend like robots are going to save you, which is what they're doing,” he said. “But nobody's buying a robot anytime soon, and full self-driving still doesn't work."
Not all investors are ready to jump ship. Gerber acknowledges that many of his clients remain loyal Tesla shareholders.
"We have a lot of shareholders that are big believers in Tesla,” Gerber said. “They don't want to sell their stock, they believe in this future that Elon's painting out for them."
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