US President Donald Trump announced his intention to purchase a new Tesla, following a significant drop in the electric car company’s stock. Tesla shares plummeted more than 15%, attributed to concerns over production targets and declining sales. Trump’s endorsement praised Tesla’s achievements, stating that the company is doing a “fantastic job.”
“I’m going to buy a brand new Tesla tomorrow morning as a show of confidence and support for Elon Musk, a truly great American” – Donald Trump
The decline in Tesla’s stock performance has been linked to several factors, including problematic production targets and a notable drop in sales over the past year. Analysts have also pointed to growing competition from Chinese electric vehicle manufacturers as a contributing factor. Linsay James, an investment strategist at Quilter Investors, emphasized that the issue “comes down to hard numbers,” noting that new orders in Europe and China have “effectively halved over the last year.”
Protests and Trump’s Response
Amidst these challenges, demonstrations have erupted outside Tesla dealerships across the United States. Approximately 350 demonstrators gathered in Portland, Oregon last week, while nine individuals were arrested outside a New York City dealership earlier in March. President Trump attributed these protests to “radical left lunatics” aiming to harm Tesla’s owner, Elon Musk.
Despite these controversies, Trump’s public support seemed to have positively impacted the market. Following his comments, Tesla shares experienced a 5% rise in premarket trading. However, some analysts remain cautious, attributing part of the stock’s volatility to Trump’s economic policies on tariffs, which continue to make investors uneasy.
Tesla shares have returned to levels seen before the US election. Initially, they surged post-election as investors anticipated benefits from Musk’s perceived alignment with Trump’s administration. However, this optimism waned as concerns about over-valuation and competitive pressures surfaced. According to experts, the recent decline is viewed as a market correction.
“When we look at new orders, for example in Europe and China, you can see that they’ve effectively halved over the last year” – Linsay James
Elon Musk’s leadership extends beyond Tesla through his involvement with the so-called Department of Government Efficiency (DOGE), although this entity is not officially recognized by the US government. DOGE aims to implement substantial cuts to federal funding. Musk has also been vocal in his support for far-right political views.
The broader sell-off in technology stocks has compounded Tesla’s challenges, with shares sinking by 15.4%. Investment strategist Linsay James highlighted that this is “an element” of uncertainty affecting investor sentiment.
Author’s Opinion
While Trump’s endorsement provided a temporary boost to Tesla’s stock, the company’s underlying issues—such as production struggles, competitive pressures, and falling demand—remain. The broader market volatility and challenges within the electric vehicle industry will continue to pose risks to Tesla’s performance, and any short-term gains from political support are unlikely to address these fundamental concerns.
