(Bloomberg) — Tesla Inc. shares fell on renewed questions over Elon Musk’s role with the federal government and uncertainty over the company’s plans to introduce a lower-cost electric vehicle.
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Wedbush Securities analyst Dan Ives said Tesla’s chief executive officer should step back from his controversial work at the Department of Government Efficiency and re-focus his attention on the carmaker. Tesla is facing a “code red” moment as it prepares to report first-quarter earnings Tuesday, the analyst said.
“Musk needs to leave the government, take a major step back on DOGE, and get back to being CEO of Tesla full-time,” Ives wrote in a report to clients Sunday. “Tesla is Musk and Musk is Tesla… and anyone that thinks the brand damage Musk has inflicted is not a real thing, spend some time speaking to car buyers in the US, Europe, and Asia. You will think differently after those discussions.”
Tesla shares slid 6% at 9:56 a.m. Monday in New York, the biggest decliner in the S&P 500 Index. The stock has lost about 44% of its value this year as a consumer backlash against Musk has contributed to a global sales slump.
The EV maker will delay by several months the production launch of a long-awaited lower-cost model, Reuters reported Friday, citing unidentified people with knowledge of the matter. Investors have been hopeful that a stripped-down version of its top-selling Model Y SUV could revive demand.
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Two weeks ago, Ives slashed his price target for Tesla’s stock by 43%, citing a brand crisis created by Musk and US President Donald Trump’s trade policies. Ives’ biggest concern has been the potential for Tesla to get caught up in the backlash against Trump’s tariff policies in China, where the company generated more than a fifth of its revenue last year. Musk has also become the face of Trump’s efforts to slash the size and scope of the federal government, infuriating progressive consumers who are a key client base for the leading American electric vehicle maker.
“Tesla has unfortunately become a political symbol globally of the Trump Administration/DOGE,” wrote Ives. He then ticked off several points: Tesla’s stock has been crushed since inauguration, the company’s first-quarter delivery numbers were terrible and protests against Tesla continue. Tesla faces “potentially 15%-20% permanent demand destruction for future Tesla buyers due to the brand damage Musk has created with DOGE,” according to Ives.
