Tesla’s CEO Elon Musk sought to calm growing concerns among employees as the automaker experiences one of its worst stock market plunges in years. During a company-wide meeting on Thursday, Musk urged employees to hold on to their shares despite a staggering 50% drop in Tesla’s stock price, assuring them that the company’s future remains “bright and exciting.”

“There are times when there are rocky moments,” Musk said during the all-hands meeting, which was streamed on his social media platform, X (formerly Twitter). “But what I’m here to tell you is that the future is incredibly bright and exciting, and we’re going to do things that no one has even dreamed of.”

His remarks come as Tesla faces a storm of negative publicity, declining vehicle sales, and increasing consumer backlash. The sharp drop in stock price has been exacerbated by Musk’s recent political alignment with the U.S. President Donald Trump, leading to significant brand damage.

Political Ties Stir Controversy, Tesla Owners Abandon the Brand

Tesla has found itself at the center of a political firestorm after Musk accepted a role in Trump’s administration as head of the newly created “Department of Government Efficiency” (Doge). Since then, Musk has spearheaded drastic policy changes, dismantling federal agencies, canceling government contracts tied to diversity, equity, and inclusion (DEI) initiatives, and making a controversial gesture at a rally that critics, including his estranged daughter, have called a “definitely a Nazi salute.”

This has led to a severe reputational crisis for Tesla. Many long-time Tesla owners, previously devoted to the brand, are now rushing to sell their vehicles. Reports of vandalized Teslas have surfaced across the country, with some owners finding their cars defaced with anti-Nazi graffiti. Others have taken more extreme actions, including setting their vehicles on fire.

The Vancouver International Auto Show has also distanced itself from Tesla, citing security concerns amid widespread protests against Musk. “We had to remove Tesla from our lineup due to ongoing tensions and the potential for disruptive demonstrations,” an event organizer said.

Musk, however, remains defiant. “If you read the news, it feels like Armageddon,” he said during the meeting. “I understand if you don’t want to buy our product, but you don’t have to burn it down. That’s a bit unreasonable.”

Tesla’s Recall Woes Add to the Crisis

In the midst of the political backlash, Tesla is also dealing with a significant product recall. Just a day before Musk’s company-wide address, Tesla announced the recall of nearly 46,000 Cybertrucks, marking yet another blow to the automaker’s reputation.

The recall, affecting almost all Cybertrucks delivered since the vehicle launched last year, stems from a defect in the stainless-steel cant rail—a trim panel that can detach from the vehicle, creating a road hazard. The National Highway Traffic Safety Administration (NHTSA) flagged the issue, stating that the defect increases the risk of accidents.

Despite Musk’s efforts to portray the recall as a minor issue, critics see it as emblematic of Tesla’s declining quality control. The Cybertruck, once touted as a revolutionary vehicle, has struggled to gain traction in the market, with its unconventional design and production delays frustrating consumers.

Financial Analysts Warn of Tesla’s ‘Brand Tornado Crisis’

Tesla’s stock has historically been volatile, but the recent turmoil is testing even the most dedicated investors. Wall Street analysts are expressing concern over Musk’s ability to steer the company back on course, given his increasing focus on politics and social media controversies.

Dan Ives, a longtime Tesla bull and managing director at Wedbush Securities, did not mince words in his latest note to investors. “The brand damage started off as limited … but now has spread globally over the last few weeks into what we would characterize as a brand tornado crisis moment for Musk and Tesla,” Ives wrote.

Investor sentiment is further dampened by Musk’s unpredictable leadership style and his tendency to make sweeping statements about Tesla’s future without delivering on key promises. Over the years, he has repeatedly claimed that Tesla would soon achieve full self-driving capabilities, yet the company’s autonomous technology remains incomplete and faces regulatory scrutiny.

Musk’s Attempt to Reignite Interest in Tesla Falls Flat

In a bid to drum up excitement, Musk recently joined Trump in front of the White House to showcase Tesla vehicles. During the event, Trump declared he would buy a Tesla, a move likely aimed at boosting sales among his base. However, industry experts doubt this strategy will be enough to reverse the damage caused by Musk’s polarizing actions.

At the same time, Musk continues to tout Tesla’s future projects, including the Tesla Cybercab, a self-driving taxi concept unveiled last October. “What I’m saying is hang on to your stock,” Musk told employees, reiterating his belief that Tesla’s upcoming advancements in artificial intelligence and automation will ultimately drive the company forward.

Tesla’s Road Ahead: Can Musk Rebuild Trust?

Despite Musk’s reassurances, Tesla faces an uphill battle in regaining consumer trust and investor confidence. The automaker has already seen its market dominance eroded by rising competition from traditional automakers and Chinese electric vehicle (EV) manufacturers, such as BYD, which recently surpassed Tesla in global EV sales.

Furthermore, Tesla’s reliance on Musk as the face of the brand is proving to be a double-edged sword. While his vision and innovation have propelled the company to great heights in the past, his recent political entanglements and erratic public behavior threaten to undo years of brand loyalty.

Some industry analysts argue that Tesla’s board of directors may need to consider limiting Musk’s influence over the company or even appointing a new CEO to restore stability. However, given Musk’s dominant control over Tesla, such a shift appears unlikely in the near term.

For now, Tesla employees are left to navigate the uncertainty, with Musk urging them to stay the course. But as protests escalate, stock prices tumble, and competitors gain ground, one question looms large: Will Tesla’s future truly be as bright as Musk claims, or is the company at risk of losing its place as the leader in the EV revolution?

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Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

24th March, 2025