From Trump bump to slump: Musk can’t dodge Tesla’s $1 trillion value loss

While we await US figures for early 2025, Tesla’s sales in its biggest market by revenue fell in 2024. The drop was centred on EV heartland, and Trump unsafe space, California, where deliveries fell 11 per cent despite the addition of a brand-new model, the Cybertruck. One sign of continuing pressure was this week’s announcement of zero-down, zero-rate financing for the Model 3 in the US. Such a discount is all the more remarkable given a refreshed version of the sedan was released only just over a year ago.

That should raise a red flag regarding one counterargument on falling sales. Tesla warned on its last earnings call that factory shutdowns to refresh its biggest seller, the Model Y, would hurt sales in the first quarter. That is no doubt playing a role, although the company’s habitual paucity of guidance makes it hard to quantify. Yet the refreshed Model 3’s lack of vim, plus multiple quarters of lacklustre sales and falling margins overall, point to a bigger problem than temporary shutdowns.

Tesla’s old lineup and stubborn manufacturing costs predated the election. This weighs even in markets where drivers are less likely to care about Musk’s DOGE-ing. In China, Tesla’s largest EV market by volume, sales have slumped in the past two months, and that has more to do with intense competition.

Perhaps nothing captures that more than BYD’s recent announcement that it would make its own advanced driver assistance system — something for which Tesla charges thousands of dollars — standard across most of its lineup. Meanwhile, in the UK, Tesla’s sales are actually up in early 2025, but it is nonetheless on track to lose its number one position in EV sales there according to New AutoMotive, an EV-focused research organisation, as rivals catch up.

In that environment, while drivers may or may not ultimately care about the boss’s politics, you don’t want to give them any reason to think twice. Musk went back onto Joe Rogan’s podcast last week for another episode almost as long as The Brutalist, in part, it seems, to deny — as some say video evidence suggests — that he had given a Nazi-like salute at Trump’s inauguration. Rogan backed him up, calling the accusation “strange.”

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I would venture, however, that a real friend — or halfway capable PR agent — would advise Musk that, although hand gestures that could be interpreted as fascist are bad, the need to go around denying you gave them is itself a branding problem already.

Tesla faces a potentially pivotal few months. First-quarter results, due in April, will almost certainly be weak and while the stock has dropped a lot, it still commands a multiple of 88 times forward earnings. With EV sales providing little support for that, and the Trump factor faded and corrosive, embedded somewhere in there are expectations for two catalysts: new, lower-priced models and the launch of an initial robotaxi service in Austin.

The company has pledged both for the first half of 2025. Despite being almost halfway through that half, we are yet to see those new models. Meanwhile, the Austin robotaxi launch is freighted with a legacy of multiple missed deadlines and, given the limited rollout, the implicit scaling back of Tesla’s earlier, more expansive autonomy ambitions. November spawned an ephemeral rally. What happens between now and June will be more consequential.

Liam Denning is a Bloomberg Opinion columnist covering energy. A former banker, he edited the Wall Street Journal’s Heard on the Street column and wrote the Financial Times’s Lex column.

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