Over the past month, Tesla has faced big trouble! This time, it's not just about vehicle sales or technical challenges. The high-profile rift between CEO Musk and U.S. President Trump has pushed this electric vehicle giant deeper into a public controversy.
From "Best Friend" to "Political Traitor"
Musk was one of the biggest donors for Trump's 2024 campaign and an important proponent of the "Department of Government Efficiency (DOGE)" plan to cut federal employees. As a regular guest at the White House and Mar-a-Lago, Musk was once considered one of the most important civilian advisors for Trump's second term.
Trump and Musk had a falling out
But after Trump signed a new tax and spending bill, Musk suddenly announced the formation of a new political party, aiming to challenge the Washington establishment. This not only angered Trump but also led to a verbal battle on their respective social platforms. Musk's political radicalization quickly raised concerns in the capital market: is he going to drag Tesla into the mud?
Investor Anxiety: The CEO Is Fighting, Who Is Driving?
Although Musk claimed he would return to the front line of business and focus on company operations again, the capital market didn't buy it. On the first trading day of July, Tesla's stock price fell by 6.8%.
Wall Street analyst Dan Ives bluntly pointed out: "Musk's deep involvement in politics, now trying to challenge the establishment, completely contradicts what Tesla shareholders want him to do during this critical phase."
Ives even called on the Tesla board to legislate and limit Musk's time and energy spent on politics. He pointed out that Tesla is at a critical turning point in the development of autonomous driving and robot technology, and "there is no extra energy left for an adventure of building a political party."
In response to the criticism from Wall Street, Musk's reply was simple and brutal: He retorted on X platform, "Shut up, Dan."
The Profit Engine Fails: Tax Reform Bill "Precisely Strikes" Tesla
However, this public controversy has indeed severely damaged Tesla's core financial foundation.
According to a report by William Blair analysts, Trump's new bill eliminated the $7,500 tax credit for electric vehicle (EV) buyers, as well as the economic penalties for traditional car manufacturers that did not meet emission standards. For a long time, these penalties prompted traditional car manufacturers to purchase "emission credit quotas" from Tesla, which became a major source of profit for Tesla.
Data shows that since 2019, Tesla has earned $10.6 billion in profits from selling these credit quotas, and in some years, it relied on this income to achieve profitability.
Now, with this policy being abolished, demand for credit quotas has sharply declined. The Blair analysts warned that this change could lead Tesla back to losses. In fact, Tesla's profit fell by 71% year-on-year in the first quarter of 2025, and with declining sales, losses seem almost inevitable.
Cybertruck Can't Bear the Weight: Future Icon Becomes a Real Problem
The Cybertruck, once highly anticipated, now faces dual challenges of sales and delivery capacity. Although Musk publicly launched this sci-fi-style electric pickup truck at the end of 2023 and claimed that its pre-orders exceeded 1 million units, the market reaction has been far below expectations.
Actual data shows that the Cybertruck's delivery volume since its launch has fallen short of analyst expectations, and the production pace has clearly lagged behind. Due to the use of stainless steel body and a new architecture, the manufacturing complexity has increased significantly, leading to a significant increase in production difficulty. Consumers who test drove the vehicle generally reported that the vehicle's handling is clumsy and the interior is simple, far from the expectations of traditional truck users.
Additionally, the Cybertruck's high price lacks competitiveness compared to traditional fuel-powered trucks, and the recent cancellation of the purchase tax credit has further suppressed potential demand. Analysts generally believe that the Cybertruck is unlikely to become a new profit driver for Tesla, more like a symbolic brand product rather than a financial growth engine.
Autonomous Driving Ambitions Hit a Roadblock: Waymo Has Silently Surpassed
Musk has publicly claimed that the future of the company will be dominated by AI robots and autonomous taxis, rather than a single electric vehicle. However, this vision is still far from reality.
Waymo autonomous taxi
Tesla launched a "self-driving taxi" pilot project in Austin, which still requires human monitors due to safety concerns. Meanwhile, Waymo under Alphabet has already started operations in San Francisco, Los Angeles, and Phoenix, and announced that it will expand to Miami and Washington, D.C. with Uber next year.
At the same time, videos circulating on social platforms show that Tesla's self-driving cars have reversed on the street and collided with parked vehicles, raising doubts about the stability of its AI technology.
Sales Collapse: Subsidies Gone + Musk "Discouraging" Customers
The global sales decline has further exacerbated Tesla's anxiety. In the first half of this year, Tesla's global sales fell by 13%, setting a new record.
On one hand, Western traditional automakers are increasing their efforts in electric vehicle models, and on the other hand, Chinese automakers such as BYD continue to expand globally. Although BYD has not yet sold in the U.S., its global sales are about to surpass Tesla for the first time.
Meanwhile, in the United States, the new law has canceled the electric vehicle tax credit, which has hit demand. When a similar policy failed in 2019, Tesla had to cut prices nearly in half to maintain sales. If subsidies disappear completely, the market may shrink further.
More troubling is that Musk's political leanings are directly harming the Tesla brand. Although he was once a Trump ally, after turning to form his own party, right-wing voters began to distance themselves from him. And the left wing has already cut ties with him because of his attacks on environmental issues and immigration policies.
This year, protests erupted outside Tesla stores in the U.S., Canada, and Europe, causing pressure on Tesla's stock price. Musk had hoped that Trump's fans would compensate for the loss of sales. Trump even publicly stated that he would buy Tesla to show support. But now, the two have fallen out, and Musk has become a figure who has offended both sides.
A Continuing Soap Opera or the Prelude to a Brand's Decline?
"He managed to offend everyone, which many people thought was impossible," Dan Ives commented to CNN. "The problem is, this soap opera seems to be continuing."
Investors, analysts, and fans are all waiting for an answer: Can Elon Musk still be a good CEO?
With the future narrative of AI, robots, and autonomous driving still unclear, the core profit engine extinguished, and global sales declining, if Musk cannot quickly stop, stabilize the management team, and regain market confidence, Tesla may fall from a "tech legend" back to a "real crisis."
A risk investor who did not want to be named privately said: "Musk is experiencing his Jobs moment, the difference is that no one can ask him to leave this time."
Original article: https://www.toutiao.com/article/7524801337788383753/
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