Tesla’s Stock Nosedives 50% as Political Fallout Triggers Investor Alarms

Tesla’s Stock Nosedives 50% as Political Fallout Triggers Investor Alarms

DECK
Dan Ives, once Tesla’s loudest cheerleader, warns of irreversible brand damage unless Elon Musk steps away from politics.

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KEY FACTS

• What: Tesla stock has tumbled by 50% from its December peak.

• Why: Weak first-quarter vehicle deliveries and escalating political controversy around CEO Elon Musk.

• Who: Equity analyst Dan Ives, a longtime Tesla bull, has revised his stance.

• When: The downturn began after the 2024 U.S. presidential election.

• Where: Global markets, with major impacts in the U.S., Europe, and China.

• How: Political entanglements, declining deliveries, and public backlash driving down confidence.

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SITUATION SNAPSHOT
Once riding high on expectations of political favor and AI breakthroughs, Tesla stock has taken a steep dive, erasing half of its market value since December. Investors who once banked on Elon Musk’s alignment with political power are now reckoning with a sharply altered investment landscape.

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WHAT WE KNOW

Tesla shares peaked at $480 late last year, shortly after Donald Trump won the presidential election with significant backing from Elon Musk. Many anticipated that this relationship would fast-track Tesla's expansion, particularly in autonomous technology. Instead, Tesla has experienced a steep stock decline and mounting brand woes.

Dan Ives of Wedbush Securities—who has historically been among Tesla’s most optimistic analysts—has downgraded his outlook, citing the political controversies surrounding Musk as a major liability. Once predicting a share price of $600, Ives has now slashed his target to $315.

Tesla's first-quarter vehicle deliveries dropped by 13%, marking the lowest figures in three years. Simultaneously, the broader electric vehicle market experienced 29% growth. The company’s market share shrank significantly: 9 percentage points in both the U.S. and Europe, and 4 points in China.

Ives warns this is more than a short-term hiccup. "Permanent brand destruction" is on the table if Musk doesn’t refocus on Tesla’s core business and distance himself from partisan politics.

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WHAT’S NEXT

Tesla is expected to unveil its robotaxi fleet in June, followed by potential commercialization of Optimus humanoid robots in 2026. While these technologies present massive revenue potential, much hinges on timely execution—a challenge the company has historically struggled with.

Ives maintains a “buy” rating but with cautious optimism, noting that further political missteps could derail Tesla’s recovery and long-term prospects.

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VOICES ON THE GROUND

"This is a self-inflicted wound," said Dan Ives. "If Musk doesn’t pivot back to Tesla’s mission, the damage could be permanent."

He added, "That is overwhelming due to autonomous vehicles and autonomous humanoid robots."

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CONTEXT

Tesla’s decline comes amid heightened scrutiny of Musk’s role in politics. As the head of the Department of Government Efficiency and a major Trump ally, Musk has alienated a wide swath of consumers. New tariffs under the Trump administration are further straining Tesla’s supply chain, especially for imported components.

The company is still navigating uncertain terrain. While AI and robotics are massive potential markets, execution risk remains high. Past delays in delivering major milestones only deepen skepticism among investors.

Despite these concerns, analysts acknowledge that Tesla could eventually outpace its rivals if it delivers on its ambitious roadmap. The current valuation, however, is difficult to justify without meaningful earnings acceleration.

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REPORTER INSIGHT

From the bullish buzz to the bruising blow, Tesla’s story has shifted rapidly. At its peak, the stock was buoyed by promises of innovation and political synergy. Today, it’s a cautionary tale of how closely corporate success can be tied to executive behavior—and how quickly public sentiment can turn.