Tesla is Elon Musk. Elon Musk is Tesla. Rarely the identity of a company was thus indirectly linked to its general manager, for better and for bad. For years, this fusion has been superpower, giving Tesla an innovative mysticism that attracted investors and proposed its assessment. Now, that same relationship has become a massive passive.
In a brutal reaction to Elon Musk’s latest political bomber – the launch of its own political party – investors deleted nearly $ 70 billion from Tesla’s market capitalization at a single trade session on Monday. The immediate cause was Musk’s Oticosa weekend that saw him Create the “American Party” Just days after a fire public split with President Donald Trump.
This one-day loss is part of a much larger implosion. After peaking near $ 1.5 trillion after the 2024 election, Tesla saw its market value collapse. In just over six months, more than $ 350 billion from its estimate has disappeared, as Musk’s political activism alienates the company’s core customers and tracks Wall Street.
The problem for Tesla is that the “mouse magic” has long masked fundamental business weaknesses. The company’s portfolio of the company is widely seen as aging. While Competitors like China BYD And the US General Motors release a variety of new and accessible models, Tesla has not launched a mass market vehicle in years. Its much-hyped Cybertruck was a business disappointment, and its lead in the EV market evaporated.
For years, Musk could distract these things with the promise of the future. Take his robotaxi service, for example. Although Google Waymo of Google is the established leader in autonomous drive, Musk’s announcement about Tesla robotaxi -service“Leared with much fanfare on June 22,” had analysts immediately predicting Tesla’s rule. The reality, however, is a service that works in a small, geographically fortified area in Austin, Texas, with a human supervisor in the passenger seat. Videos posted online show a significant performance gap still exists between Tesla and its more established rivals.
Now Musk’s political war is adding a new layer of risk at the worst possible time. After spending a reported amount of nearly $ 290 million to help Donald Trump return to the White House, the role of Musk as head of the “Department of Government Performance” of the administration and his later, spectacular fall with the president put Tesla in the political crosses.
His new “American party” is a direct challenge to Trump administration, whose signature “one big beautiful bill” removed the federal EV tax credits, which were of great importance to Tesla’s sales. With those $ 7,500 credits set to expire on September 30, it is unclear how Tesla will compete for price, especially with an alienated customer base.
While Musk is paying his political battles, Tesla stays with an aging product line, a fierce competition, and a customer base, which is more and more off the behavior of its general manager. The company needs to hopefully its visionary leader to solve its mounting problems, from developing its robot Optimus to refreshing its cars models. Instead, it has a distracted CEO by choosing struggles in Washington.
“Musk is Tesla. Tesla is Musk, Tesla’s greatest asset,” Dan Ives repeated Wedbush’s analyst Securities on Monday. As the veteran analyst noted, Musk is both the biggest asset of the company and its biggest risk.
Wedbush’s Dan Ives: “Musk is Tesla. Tesla is Musk, Tesla’s biggest advantage.”@Divestech Says Elon Musk is Tesla’s greatest strength, but also a big risk! His political actions could scare some investors and hurt Tesla in key areas like China.
Can Elon stay focused on … pic.twitter.com/c9smg7tchb
– Herbert Ong (@Herbertong) 7 July 2025
Right now, with billions bleeding from the value of the company, Musk proves to be a risk that many investors are no longer ready to take.
