Is Musk's Political Pivot Good for Tesla? Experts Weigh In
Musk left DOGE in May and committed to focusing on Tesla. Since then, however, he had a public blowout with President Donald Trump and is now talking about forming a political party called the American Party, according to a post he wrote on X, which is creating chaos for the brand and uncertainty for investors.
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While Musk redefined the car industry, his avid political interests have shaken up the market and spooked investors. Read on for experts' take on whether Musk's pivot is good for the company and the stock.
How Musk's Political Aspirations Impacted Tesla
In the first quarter, electric vehicle (EV) sales increased more than 11% year over year, per Cox Automotive, but Tesla hasn't been riding that wave. Tesla saw its sales fall, and many attributed that, in part, to Musk's political involvements earlier this year.
In the company's first quarter earnings release, it reported that net income fell by 71% year over year, per NPR, and in the second quarter, it reported that sales plunged a record 13.5% year over year, per CNN.
Its stock also saw a lot of volatility during this time. On the first trading day of 2025, Tesla stock closed around $380. By the end of March, it had fallen to around $260. It has since recovered some of those losses and is trading around $330 as of July 22.
'When Musk got into politics, it created confusion for investors,' said Gilbert Michaud, Ph.D., assistant professor of environmental policy at Loyola University Chicago. 'When he removed himself from DOGE, things got better.'
However, Musk is still involving himself in politics and offering criticisms of the president on social media, which has led to more volatility in the stock.
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Musk Could Still See Backlash From Investors
Investors expect a strong visionary at the helm of a company to guide it to success, and Musk was that trailblazer, but some people are now questioning his choices.
'Every time Musk leans heavily into politics, Tesla's stock tends to react and not always positively,' according to Michael Foguth, founder and president of Foguth Financial Group. 'Investors typically want leadership that's focused on operations and innovation, not controversy. His new political party initiative could become a distraction and raise concerns over long-term vision and brand stability.'
'Musk's personal brand creates uncertainty for many. If Musk weaves his way back into politics or anything else that is perceived as risky, some backlash may occur,' Michaud said.
Is Musk Still the Right Fit for Tesla?
Musk's behavior is playing out on a global stage, and it's making some people nervous and skeptical that he can continue to lead Tesla.
'While Musk built Tesla, he may not be the right face for its next chapter,' Michaud said. 'The pivot into politics has definitely alienated many consumers and investors, and the company may want to be more disciplined and strategic in its next moves, especially if he forms a new political party.'
And the question people are asking is whether Musk is still good for Tesla. 'Yes, in terms of innovation and brand,' Foguth said. 'But the more he strays from that lane, the greater the volatility risk for shareholders.
Musk Still Has an Impact on Tesla
'Musk's influence on Tesla is still significant,' Foguth said. 'His technological vision has created massive shareholder value.'
However, Musk's lack of commitment to Tesla could cost him a lot more over time. 'If politics continues to dominate headlines, it could erode investor confidence, especially among ESG investors or those with short time horizons,' Foguth explained.
It's undeniable that Musk reimagined what a car could be like and completely transformed the driving experience for countless consumers, but his recent involvements and politics have caused the company some trouble. While he has since committed to spending more time at Tesla, it remains to be seen what's in store for the company and stock going forward.
Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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