Can Elon Musk get Tesla back on track? Here are four road bumps

Yahoo

a day ago

After a tumultuous months-long period by President Trump's side, Elon Musk is turning his attention back to his companies, including the stumbling electric vehicle maker Tesla Inc.
Musk announced on X last week that his time as a special government employee was over.
Tesla investors welcomed the news, hoping that Musk's departure from Washington would boost his car company's reputation and lagging performance.
Since Musk began his role leading the White House advisory team called the Department of Government Efficiency in January, Tesla's stock has fallen roughly 12%. On Tuesday, the shares closed at $332, down 3.5%.
The Austin, Texas-based company — which has a significant manufacturing operation in Fremont, Calif., and is the dominant EV company in the state — has been the subject of protests and vandalism as Musk, the company's chief executive, aligned himself with Trump and made controversial spending cuts on behalf of the federal government. The brand damage spread outside the U.S. to Europe, where monthly sales in 32 countries fell nearly 50% in April.
Read more: Tesla profit falls in the wake of brand controversy and tariffs
"It was very important for Musk to end this chapter and start working on Tesla's next stage of growth," Wedbush Securities analyst Dan Ives said. "Now he can get back to what he's supposed to be doing."
As the executive shifts his focus back to Tesla, here are four challenges experts say he must tackle:
By associating himself with the president and the Trump administration's erratic actions, Musk alienated a large swath of his customers. Many Tesla drivers are liberal-leaning, industry analysts said, and were drawn to the company's environmental mission to take gas cars off the road.
In protest over Musk's activities, some Tesla drivers, including celebrities, began selling or getting rid of their vehicles. Others sported new bumper stickers that said, "I bought this before we knew Elon was crazy."
In February, Tesla topped the list of brands that lost the most resale value year over year, according to data provided by Karl Brauer, an analyst with iSeeCars.com. The price of a used Tesla Model S and Model Y each dropped by about 16% in February from a year earlier.
'Price is a reflection of supply and demand,' Brauer said. 'So it could be that nobody wants to buy them anymore, or that there's a massive influx of them available, or both.'
Read more: 'I've been betrayed.' Tesla drivers are pushing back on Elon Musk
Now that he's left Washington, Musk will have to prove that his attention is on Tesla and that he isn't prioritizing political agendas. Ives estimated that about 5% to 10% of the brand damage sustained during Musk's stint in the capital will be permanent.
'Tesla has become a political symbol around the world and that's not a good thing,' said Ives, who has an "outperform" rating on Tesla's stock. "But there are much brighter days ahead now that Musk is no longer in the White House."
Musk has made lofty promises for years about the capabilities of Tesla's self-driving technology and plans for a robotaxi service. Though he has often over-exaggerated his progress, Musk has taken important steps toward commercializing autonomous driving technology.
The future of his company depends on whether he can follow through, experts said.
"Musk's top priority should be autonomy and robotics," Ives said. "With these technologies, I believe Tesla's market cap could reach $2 trillion." The company is currently valued at just over $1 trillion.
According to claims Musk has made, Tesla drivers will one day be able to sleep in their car as it drives them across the country. Tesla's robotaxis will roam city streets, and humanoid robots dubbed Optimus will perform everyday tasks.
Read more: Tesla Optimus bots were remotely operated at Cybercab event
Brauer compared the emergence of autonomous driving technology to a change on the scale of the internet or smartphones. But it's still far off, he said. Although the driverless taxi company Waymo is already operating in a few cities including Santa Monica, it could take 10 to 15 years for the technology to become widely accessible and integrated into society, Brauer said.
Tesla remains the dominant force in the electric vehicle market, but rapidly increasing competition from traditional carmakers and other EV manufacturers have thinned sales, Brauer said.
Major manufacturers including Ford and Chevy have released lines of their own electric vehicles, while promising startups such as Irvine-based Rivian have cut into Tesla's market share. At the same time, demand for electric vehicles is plateauing as the market gets saturated, Brauer said.
Read more: The plan for Irvine EV maker Rivian to emerge from its 'awkward teenage years'
Tesla's profit plummeted 71% in the first quarter to $409 million as the company faced a flurry of setbacks, including a falloff in automotive sales and rising competition.
To keep up and remain viable, Tesla will have to reassess aspects of its business model.
"Many people, I think including Musk himself, have realized that the current business model is pretty much played out," Brauer said. "He's not going to substantially increase his revenue and his profit selling these same electric cars."
Read more: With an executive order, Trump casts doubt on the future of EVs in California
Tesla could receive a boost in sales if it successfully launched an affordable model accessible to more customers, but despite rumors and claims by executives, a release date has not been announced.
The company could be further hurt by the loss of a $7,500 federal electric vehicle credit, which encourages sales and is likely to be eliminated by the Trump administration.
While chargers for electric vehicles are ubiquitous in many parts of California, infrastructure is lacking throughout large areas of the country — and that's a problem. For the U.S. to rely more heavily on EVs, significant progress has to be made on the network of charging stations, Brauer said.
Read more: Broken chargers, lax oversight: How California's troubled EV charging stations threaten emission goals
Finding a time and place to charge is an obstacle for many Tesla drivers and limits the range of customers Tesla can reach. The lack of a fully comprehensive charging network would also hinder Musk's plans to operate a nationwide robotaxi service, Brauer said.
In California, many chargers are broken or have been intentionally damaged by protesters.
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This story originally appeared in Los Angeles Times.