Tesla and Elon Musk have always been intertwined—so much so that one can’t easily be separated from the other. This relationship has fueled Tesla’s meteoric rise, making it a beacon of innovation and investment appeal. However, recent events point to a troubling reality: what was once an asset may now be weighing the company down.
Investors experienced a shock when Tesla’s market capitalization plummeted by nearly $70 billion in a single trading session. This decline came hot on the heels of Musk’s announcement of a new political party called the “America Party,” shortly after a dramatic falling out with former President Donald Trump.
Declining Value Amid Political Turmoil
Following the 2024 election, Tesla’s market value peaked at around $1.5 trillion. However, in the months since, over $350 billion has evaporated from this valuation as Musk’s political activities have turned off key customers and rattled investors. How has this happened? The “Musk magic” that once masked underlying business issues now only highlights them.
Stagnation in Tesla’s Product Line
Tesla’s five-model lineup is starting to look dated compared to competitors like China’s BYD and America’s General Motors, which are rolling out new and affordable models. The much-anticipated Cybertruck? A commercial letdown. With no mass-market vehicle released in years, Tesla’s leading position in the electric vehicle (EV) market is slipping away.
The Promise of Autonomy vs. Reality
While Musk has made headlines with announcements, such as the much-discussed robotaxi service, the execution has left much to be desired. Launched with great fanfare in June, Tesla’s robotaxi operates in a controlled area in Austin, Texas, and is supervised by a human. This is a far cry from the fully autonomous experience that Tesla has promised, revealing a performance gap when compared to established players like Google’s Waymo.
Political Risks Impacting Sales
Musk’s $290 million gamble to help Trump reclaim the presidency has only intensified scrutiny and risks. With his role in the controversial “Department of Government Efficiency” (DOGE) and his recent split with Trump, Tesla now finds itself politically exposed. The new “America Party” challenges Trump’s administration, especially concerning the removal of federal EV tax credits that have been vital for Tesla’s sales. If these $7,500 credits expire, how will Tesla maintain competitive pricing amidst a disillusioned customer base?
What Lies Ahead for Tesla?
As Musk engages in his political machinations, Tesla is stuck with aging products and tough competition. With the increasing alienation of customers due to Musk’s behavior, there’s a pressing need for leadership focused on solving the company’s challenges—ranging from the development of the Optimus robot to refreshing vehicle models. Instead, Musk seems preoccupied with his political battles.
“Musk is Tesla. Tesla is Musk, Tesla’s biggest asset,” remarked Dan Ives of Wedbush Securities. His insights capture the dual-edged sword that Musk represents to the company—he is both a tremendous boon and a substantial risk all at once.
Wedbush’s Dan Ives: “ Musk is Tesla. Tesla is Musk, the biggest asset of Tesla.”@DivesTech says Elon Musk is Tesla’s biggest strength, but also a big risk! His political actions might scare some investors and hurt Tesla in key places like China.
Can Elon stay focused on… pic.twitter.com/C9SMg7tChB
— Herbert Ong (@herbertong) July 7, 2025
Ultimately, with billions being wiped from Tesla’s worth, it’s clear that Musk’s influence may no longer be a safe bet for investors.
Why has Tesla’s market cap dropped in recent months? A combination of Musk’s political activities and an aging product line is causing concern among investors.
What challenges is Tesla facing moving forward? The company is grappling with stiff competition, an outdated product range, and an increasingly disenchanted customer base.
Can Tesla recover its standing in the EV market? That will largely depend on how Musk balances his political involvement with the pressing need to innovate and connect with consumers.
Is Tesla still a leader in the EV sector? While it remains influential, companies like BYD and General Motors are closing the gap with new, affordable offerings.
If you’re interested in learning more about Tesla and its future, keep exploring related content on Moyens I/O.