Tesla EV Sales Plunge Under Trump Pressure

The Tesla-Trump Alliance and Escalating Tensions

On a brisk Tuesday morning in March 2025, former President Donald Trump stood beside Elon Musk outside the White House, flanked by a row of gleaming Tesla vehicles. With a hand resting on a crimson Model S, Trump declared protesters targeting the electric carmaker “domestic terrorists,” vowing they would “face hell” for their actions. The event, ostensibly a promotional showcase for Tesla, quickly spiralled into a political lightning rod, blending corporate branding with divisive rhetoric.

Musk, seated in the passenger seat of the same Model S, listened as Trump praised Tesla as a “great American company” under siege. Though the former president claimed he intended to purchase the vehicle, he clarified he would gift it to staff, citing security protocols that bar ex-presidents from driving. Meanwhile, the spectacle unfolded against a backdrop of plummeting Tesla shares, which had halved since their December 2024 peak. Just a day earlier, the stock nosedived 15%, rattling investors already uneasy about production delays and slumping sales.

Protests, Politics, and Brand Backlash

The alliance between Trump and Musk has proven polarising. Since Trump’s return to the White House in January 2025, Musk has spearheaded the Department of Government Efficiency (Doge), slashing federal jobs, scrapping international aid programmes, and championing far-right policy agendas. These moves have alienated a segment of Tesla’s customer base, sparking “Tesla takedown” protests from Portland to New York City.

In early March, demonstrators gathered outside Tesla showrooms, waving signs condemning Musk’s political ties. While organisers insisted the rallies were peaceful, incidents in Colorado and Massachusetts saw charging stations vandalised and showrooms set ablaze. Trump, however, framed the dissent as an attack on American innovation. “You harm Tesla, you harm America,” he asserted, doubling down on his pledge to designate such protesters as terrorists. A White House spokesperson later confirmed the stance, escalating tensions between the administration and civil liberties groups.

Market Turbulence and Production Woes

Tesla’s financial struggles, meanwhile, extend beyond political controversies. According to UBS analysts, the company’s 2025 delivery forecasts could fall short by up to 20%, citing weakened demand in critical markets. In Europe, sales plummeted 45% year-on-year in January 2025, as reported by the European Automobile Manufacturers’ Association (ACEA). Similarly, Chinese sales dropped 30% in the same period, eroding Tesla’s dominance in the world’s largest EV market.

Lindsay James, an investment strategist at Quilter Investors, attributes the decline to a mix of economic headwinds and  brand erosion. “New orders in Europe and China have effectively halved,” she noted, adding that Musk’s political entanglements have compounded existing anxieties. Despite this, James emphasised that “hard numbers” – not just optics – are driving the sell-off. Tesla’s valuation, which peaked at $1.2tn in late 2024, now hovers around $600bn, reflecting investor scepticism about its ability to sustain growth amid rising competition from Chinese rivals like BYD and NIO.

Musk’s Divided Attention

Critics argue Musk’s focus has strayed from his companies. In a Monday interview with Fox Business, he admitted balancing Doge responsibilities with Tesla, SpaceX, and X (formerly Twitter) was “gruelling.” Recent setbacks support this view: SpaceX’s Starship rocket exploded during two consecutive test launches, while X suffered a 12-hour global outage on 10 March, wiping $3bn from its valuation.

Trump’s policies further complicate Tesla’s path. Despite his public support, the former president has rolled back key EV incentives, including Biden’s 2030 electric vehicle mandate and federal funding for charging infrastructure. Tesla CFO Vaibhav Taneja warned in January that Trump’s proposed tariffs on Mexican and Canadian auto parts could squeeze profit margins, which already dipped to 16% in Q4 2024, down from 23% a year prior.

A Perfect Storm of Challenges

The confluence of political backlash, operational missteps, and macroeconomic pressures has left Tesla at a crossroads. While Trump’s endorsement may rally his base, it risks deepening divisions within Tesla’s traditionally eco-conscious clientele. Meanwhile, Musk’s dual roles as government disruptor and corporate titan have strained his capacity to steer the company through its most turbulent period since the 2018 “production hell” crisis.

As protests intensify and competitors gain ground, the road ahead for Tesla appears fraught with obstacles. Yet, for Trump and Musk, the White House event symbolised defiance – a refusal to yield to critics. Whether this partnership stabilises Tesla or accelerates its decline remains uncertain, but one thing is clear: the stakes for both men have never been higher.

A Mysterious State Department Procurement

In February 2025, a line item buried in a US State Department procurement document sparked widespread scrutiny. The spreadsheet suggested plans to purchase $400m (£315m) worth of “armoured electric vehicles” from Tesla, raising eyebrows given Musk’s dual role as a White House official and Tesla CEO. Though the document claimed origins in the Biden administration, NPR’s investigation revealed discrepancies: the proposal only surfaced publicly in February 2025, months after Trump took office.

The procurement plan, later edited to remove references to Tesla, hinted at replacing 3,000 diplomatic vehicles with Cybertrucks. Security experts estimated the cost would cover both purchasing and “up-armouring” the stainless-steel trucks, which weigh 7,000 pounds before modifications. Mark Burton, CEO of Utah-based Armormax, noted diplomatic armouring starts at $70,000 per vehicle, aligning with the $400m figure. Yet former State Department officials expressed scepticism. Michael Evanoff, a 40-year diplomatic security veteran, dismissed the Cybertruck as unfit for hostile environments: “You won’t see diplomats in Cybertrucks in Karachi or Mogadishu.”

Image Credit - BBC

Trump’s EV Policy Paradox

The proposed deal starkly contradicted Trump’s broader agenda. Since January 2025, his administration revoked Biden’s 2030 EV mandate, halted charging infrastructure funding, and imposed tariffs on foreign auto parts – policies Tesla CFO Vaibhav Taneja warned could dent profitability. Meanwhile, Musk’s Doge department slashed 15% of federal jobs, including roles overseeing EV subsidies, further muddying the waters.

Critics questioned whether the $400m proposal signalled preferential treatment for Musk’s ventures. Ethics watchdogs highlighted Musk’s sweeping influence: his Doge reforms have reshaped agencies like the Consumer Financial Protection Bureau, which previously investigated X for data privacy breaches. Trump, however, dismissed concerns, telling Truth Social followers: “Elon Musk is putting it on the line to MAKE AMERICA GREAT AGAIN!”

The “Everything’s Computer” Moment

During the 11 March White House event, Trump’s reaction to the Model S’s touchscreen controls went viral. Sliding into the driver’s seat, he marvelled, “Wow… everything’s computer,” sparking mockery online. One X user quipped, “An advert for a Tesla, by a man who isn’t allowed to drive,” referencing Secret Service protocols barring presidents from operating vehicles.

The gaffe underscored broader tensions between Trump’s nostalgia for fossil fuels and Musk’s tech-forward vision. While Trump pledged to “rebuild our country” through traditional industries, Musk’s ventures – from neuralink chips to Mars colonisation – rely on cutting-edge innovation. This ideological clash surfaces in policy: Trump’s tariffs on Mexican-made components could raise Tesla’s production costs by 8%, analysts warn, even as he publicly champions the brand.

Tesla’s Mounting Operational Struggles

Tesla’s challenges extend beyond politics. In Q1 2025, the company reported a $29bn loss, its steepest quarterly decline since 2018. Production bottlenecks at Gigafactories in Berlin and Texas delayed Cybertruck deliveries by six months, while software glitches plagued its “Full Self-Driving” beta. UBS analysts now project 2025 deliveries at 1.2 million vehicles, down from 1.8 million in 2024.

Competitors capitalise on Tesla’s stumbles. BYD, backed by Chinese state subsidies, overtook Tesla in global EV sales this January, selling 210,000 units compared to Tesla’s 145,000. In Europe, Volkswagen’s ID.4 captured 12% of the market, eroding Tesla’s share to 15%. “The EV race is no longer a one-horse show,” said Bernstein analyst Toni Sacconaghi. “Tesla’s first-mover advantage is evaporating.”

Musk’s “Gruelling” Multitasking

Musk’s admission to Fox Business about juggling Doge duties and his corporate empire underscored growing concerns. Since February, SpaceX’s Starship suffered two launchpad explosions, delaying a $3bn NASA lunar contract. X, meanwhile, lost 12 million active users after the 10 March outage, with advertisers fleeing over lax content moderation.

Investors increasingly blame Musk’s divided focus. “Tesla needs a full-time CEO,” said Gerber Kawasaki CEO Ross Gerber. “Right now, it’s being run by a part-time visionary and a stressed-out executive team.” Internal leaks reveal Tesla’s board debated appointing a COO in January, but Musk vetoed the move, insisting he’s “the only one who can fix this.”

The Protest Movement’s Next Phase

Following Trump’s “domestic terrorist” remarks, “Tesla Takedown” protests gained momentum. On 12 March, 5,000 demonstrators encircled Tesla’s Fremont factory, waving banners reading “Musk: Climate Leader or Climate Hypocrite?”. Organisers announced plans for a Global EV Day boycott on 22 April, targeting Tesla’s Supercharger network.

Yet the movement remains divided. While groups like Climate Defiance endorse civil disobedience, mainstream NGOs like the Sierra Club distance themselves. “Violence undermines our message,” said Sierra Club director Ben Jealous. “We’re urging peaceful dialogue with Tesla leadership.”

A Looming Reckoning for Tesla

As Q1 earnings approach, analysts predict a make-or-break moment. Tesla’s debt-to-equity ratio now exceeds 60%, up from 35% in 2024, while its cash reserves dwindled to $18bn from $26bn. Moody’s downgraded its credit rating to Baa3, citing “leadership volatility and regulatory risks.”

For now, Musk projects confidence. During a 12 March X Spaces chat, he vowed to unveil a “revolutionary” $25,000 EV model in 2026. Skeptics note similar promises, like the 2016 Solar Roof launch, resulted in costly delays. “Tesla’s survival hinges on execution, not vision,” said Wedbush’s Dan Ives. “The next six months will decide its fate.”.

Trump’s First 100 Days: A Mixed Legacy for EVs

As Trump’s administration marks its first 100 days, the impact on electric vehicles remains contradictory. While publicly championing Tesla, his policies have created hurdles for the broader EV sector. The revocation of Biden’s 2030 mandate, which aimed for 50% EV sales by 2030, has left automakers scrambling. Ford paused construction on a $3.5bn Michigan battery plant in February, citing “regulatory uncertainty,” while GM delayed the launch of its Equinox EV by nine months.

Meanwhile, Tesla faces unique challenges. Trump’s 10% tariff on Mexican auto parts, enacted on 1 March, directly impacts Tesla’s Monterrey-built Model Y. Analysts estimate the levy could add $1,200 to each vehicle’s production cost. CFO Vaibhav Taneja warned investors in January that tariffs might slash 2025 profits by $2.4bn. Yet Musk’s Doge department continues to defend the policy, calling it “essential for national security.”

The Global EV Arms Race

Internationally, Tesla’s dominance wanes as China accelerates its EV ambitions. BYD, now the world’s largest EV maker, plans to open a $1bn factory in Mexico this June, circumventing Trump’s tariffs. The move mirrors Tesla’s 2019 Shanghai Gigafactory strategy but with state-backed financing. “China’s playing chess while we’re stuck in checkers,” lamented former US energy secretary Ernest Moniz.

European regulators compound Tesla’s troubles. On 10 March, the EU imposed a 15% tariff on US-made EVs, retaliating against Trump’s levies. Tesla’s Berlin Gigafactory, which exports 40% of its output, faces €400m in annual duties. “The trade war is a lose-lose,” said ACEA president Luca de Meo. “But Tesla, caught in the crossfire, loses most.”

Musk’s Legal Quagmire

Legal challenges further distract Musk. On 12 March, the SEC reopened an investigation into Tesla’s 2023 “Full Self-Driving” claims, alleging misleading marketing. The probe could result in $2bn fines, equivalent to 10% of Tesla’s 2024 revenue. Simultaneously, the National Labour Relations Board accused Tesla of union-busting at its Fremont plant, citing 150 alleged violations since January.

Musk dismisses the cases as “politically motivated attacks.” Yet investors remain wary. Tesla’s legal reserves ballooned to $950m in Q1 2025, up from $600m a year prior. “Every dollar spent on lawyers is a dollar not spent on R&D,” noted Morgan Stanley’s Adam Jonas.

The Road Ahead: Innovation or Implosion?

Tesla’s future hinges on navigating this labyrinth of challenges. Musk’s promised $25,000 EV, codenamed “Redwood,” aims to revive mass-market appeal. Pre-orders reportedly hit 500,000 within 48 hours of the 12 March announcement. However, production won’t begin until late 2026 at the earliest, leaving a two-year gap competitors may exploit.

Simultaneously, Tesla bets on its Supercharger network, now valued at $7bn. The company plans to license the technology to rivals like Ford and Rivian, creating a $1bn annual revenue stream by 2027. Yet sceptics question the strategy. “Monetising chargers won’t offset core automotive losses,” warned Guggenheim’s Ronald Jewsicow.

Conclusion: A Pivotal Moment for Tesla and Trump

The Tesla-Trump alliance, forged in mutual self-interest, now faces existential tests. For Trump, backing Musk risks alienating moderates and environmental voters ahead of the 2026 midterms. For Musk, aligning with Trump’s agenda jeopardises Tesla’s brand equity and global ambitions.

As protests rage, stocks tumble, and rivals advance, Tesla stands at a precipice. Its ability to innovate out of crisis – as it did during 2018’s “production hell” – remains uncertain. Meanwhile, Trump’s contradictory policies underscore the fragility of political patronage in an industry demanding long-term vision.

The coming months will determine whether Tesla reclaims its throne or becomes a cautionary tale of overreach. One truth endures: in the high-stakes worlds of politics and electric vehicles, survival demands more than bold rhetoric. It requires reinvention.