Tesla's Brand Woes Amid Musk's Political Ties and Market Challenges

Elon Musk's political ties and Tesla's market challenges have led to declining sales and brand damage. Protests and increased competition compound the company's difficulties, affecting delivery projections and stock value. Analysts and investors eye the impact of refreshed models and possible introduction of a cheaper car.

Elon Musk has pledged that Tesla will rebound with growth this year, despite posting its first-ever sales decline in 2024. However, his involvement in controversial politics has sparked protests worldwide, tarnishing Tesla's brand image and contributing to a 13% drop in quarterly deliveries, the weakest in nearly three years.

Analysts including Gene Munster of Deepwater Asset Management note that the brand damage is a primary driver of the decline. Tesla's aging lineup, particularly against tough competition in China, also pressures the company. Nonetheless, Tesla's recent Model Y refresh could impact future sales in China and Europe.

Despite these efforts, Deutsche Bank predicts a 5% sales decline in 2025. The rollout of a cheaper Tesla model remains uncertain, with substantial brand risks due to Musk's political activities. Analyst Dan Ives warns about the sustainability of Musk's political roles, suggesting it adds more risk to Tesla's fragile standing.

(With inputs from agencies.)