The Journal. - Tesla Has a Problem: Elon Musk

Episode Date: March 11, 2025

Elon Musk’s politics have eroded Tesla’s appeal among some core buyers of electric vehicles. Some customers have started getting rid of their Teslas, and the company’s sales are down worldwide. Meanwhile, Musk is looking at new ways to expand Tesla’s business. WSJ’s Becky Peterson explains how Tesla’s fortunes are falling as Musk rises in Trump world. See the Journal live! Take our survey!  Further Reading: -Tesla’s Fortunes Fall as Musk Rises in Trump World  -Tesla Caps Roller-Coaster Year With Mixed Fourth-Quarter Earnings  Further Listening: -Trump 2.0: The Musk-Trump Bromance  -Inside USAID as Elon Musk and DOGE Ripped It Apart  -Tesla's Multibillion-Dollar Pay Package for Elon Musk  Learn more about your ad choices. Visit megaphone.fm/adchoices

On Saturday, scores of people converged on a Tesla showroom in lower Manhattan. Some demonstrators went inside, while others locked arms to block the door. For a while, the showroom was shut down. Demonstrations like this broke out around the country this past week. In Colorado, one Tesla showroom was hit with Molotov cocktails. In Oregon, another location was riddled with bullets. It seems like people are finding that Tesla stores, Tesla superchargers, and Teslas they see in the street

are good locations to protest what's happening in the federal government. That's our colleague Becky Peterson, who covers Tesla. So across the country, we've seen protests at Tesla sales locations. We've also seen arson at superchargers and people spray-fraiting graffiti on random cars. — This blowback against Tesla is coming as the company's CEO,

Elon Musk, has risen in the new Trump administration. And people aren't just using signs and slogans to show their disapproval. They're protesting with their wallets. — People see Tesla as a way to directly respond to what's happening in the government. Musk wasn't elected. There's not a lot of ways to hit back directly.

So there's sort of a movement to try to get at him financially. Tesla's sales are declining for the first time. That's at a company that has only seen growth for the last decade. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Tuesday, March 11th. I'm Jessica Mendoza. It's Tuesday, March 11th. Coming up on the show, are Elon Musk's politics getting in the way of Tesla's business? This Friday, grab your friends. Nova Kane? I thought you'd be dead by now.

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When Elon Musk founded Tesla, he had a mission, to help stop climate change by making electric vehicles cool. Here's Musk at one of Tesla's annual meetings. What are all the things that need to be done in order to transition to a fully sustainable global economy? Which I think, you know, the sooner we do that, the better for the planet. Tesla's mission is to accelerate the world's transition to sustainable energy. So Tesla had a stellar reputation

as being sort of this luxury car. It has electric battery, it doesn't use gasoline. So a lot of buyers saw it as a way to address climate change head on. And who have been Tesla's primary customers? What sorts of people were buying these cars? It really took off among buyers in California. Democratic state had a lot of success in areas

like San Francisco and Los Angeles, where people are dependent on cars, but are also more conscious about climate change and driving's impact on the environment. And so Teslas were seen as this sort of like high tech answer to climate change. It was kind of hard to overstate how popular it is among Californians

and in other areas like that. Tesla's took off. By 2020, the company had become the world's most valuable carmaker. Soon after, Musk became the world's richest person. And he was known as someone who had big ideas and wanted to change the world. Musk has always been an outspoken figure. He mostly in the early days stuck to making big claims about spaceflight and sort of painting this vision of a future where everyone's driving EVs, he's going to take us to Mars.

He was making bold claims, but they mostly were focused on the future of technology. Then in 2022, Musk made a major decision. He bought Twitter and renamed it X, and his big bold statements started to include more than just his takes on business and tech. He started posting a lot more about politics and getting involved in sort of like the global order of things. He has expressed opinions on everything.

By the time the 2024 presidential campaign was in full swing, Musk had become a major political presence on the right. He began donating to then-candidate Donald Trump, ultimately giving the campaign around $288 million. Musk also started appearing at Trump rallies. Come here. Take over, Elias. Take over. At his first one, he wore a MAGA hat and bounded onto the stage. Hi, everyone.

After Trump was elected, Musk was appointed the head of the Department of Government Efficiency, or DOGE, and he's frequently been at the president's side. To some customers who bought into the original vision of Tesla as an eco-friendly, save-the-world kind of company, Musk's turn has been disillusioning. We're seeing all across the country, and I've even heard stories about it happening in Europe, people buying bumper stickers or magnets put on their cars

to distance themselves from Musk's politics. Bumper stickers that say things like, I bought this before we knew Elon was crazy, and this Tesla does not endorse Elon Musk. Some people are even getting rid of their Teslas. I want to get away from Elon Musk, everything Elon Musk, what he stands for. I decided I don't want to drive a Musk mobile,

is what I've been calling this car. I love the car. I don't like driving something that's worth Elon Musk, so we're getting rid of it. Last year, Tesla sales fell 7% in the U.S. and continued to fall into 2025, according to automotive industry analysts. The company has felt the pain internationally, too, as Musk has shown support for a far-eyed party in Germany. Musk has also waded into international politics. How has that sort of shown itself

in terms of foreign buyers? You know, in areas like Germany, it's pretty clear. So sales in Germany in February were down 76% compared to February last year. And in France, they were down 26% compared to February of last year. But that's after having another huge drop in January. And what's at stake for Tesla here? Just a question of how much further can that go. But worldwide, we're seeing it lose market share in some of its most popular regions. So even though industry-wide EV sales rose 25 percent, Tesla sales still

declined last year. To be clear, Tesla's problems go beyond Musk's politics. The company is also facing growing competition from EV makers domestically and in China, where Tesla sales have taken a hit as well. But since Trump's inauguration, Tesla's stock has plummeted. The company has lost $700 billion, more than half of its value. The sales and survey data that we looked at definitely shows that politics is affecting demand.

Republicans are more likely to say that they would buy a Tesla than Democrats, which is a sharp reversal from what we've seen for most of the company's history. So the percentage of Democrats who said they would consider buying a Tesla declined from 23% in 2023 to 13% in February. And over that same period, the percentage of Republican buyers that would be interested in it grew from 15 percent to 26 percent. But the challenge for Tesla, some analysts say, is that conservatives are still more

hesitant to buy EVs. So they're not really naturally interested in the product. Yesterday, Musk acknowledged in an interview with Fox News that his work with the government is taking a toll. — How are you running your other businesses? — With great difficulty. — Later, Trump posted on social media that he would buy a Tesla as a show of support for Musk.

As Tesla struggles, Wall Street has questioned why he hasn't been around enough to fix things. So what is Musk doing with Tesla? That's after the break. TD Direct Investing offers live support. So whether you're a newbie or a seasoned pro, you can make your investing steps count. And if you're like me and think a TFSA stands for total fund savings adventure,

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I need a vacation. My algorithm suggests book before March 30th. Remember, Sunwing. Save more. Do more. Book with your local travel advisor or at sunwing.ca. Music While it seems Musk hasn't been spending a lot of time getting Tesla out of its sales slump, Becky says he's focused on steering the company in a different direction. For instance, Tesla was set to release what the company called its low-cost car last year. It was supposed to sell for $25,000,

giving the company a chance to dramatically increase the number of EVs and Teslas on the road. But Musk pulled the plug on that model. Tesla is in the process of moving from a revenue model that's almost entirely based on selling cars to one where Tesla is an AI and robotics company. These days, Musk sees the future of Tesla as largely in self-driving cars. To make this happen, the company is working on an AI-assisted software that it says will one day fully operate a car.

I think that the big shift that Musk has suggested is that Tesla could become more like a software company. So right now it sells cars, which are low margin. They're expensive to make. There's limitations on how much people are willing to spend and it's just a lot of work to build a car. This software is called Full Self-Driving Supervised, or FSD Supervised.

The software is already available, and Tesla owners can use it in a limited capacity. But Musk wants to make the cars fully autonomous. Software revenue is just a lot more valuable. So right now, if you own a Tesla and you want to subscribe to FSC Supervise, the hardware is already on the car, and then you pay $99 a month to subscribe to the service. And I think Musk envisions a future where you pay $99 a month to subscribe indefinitely.

There's also plans for Tesla to roll out robo-taxis, which is more in line with what Waymo is doing. So in that case, Tesla would own a fleet of vehicles that people could use as a ride-hailing service around the country. Right now, the plans, though, are limited in scope. Tesla said it's going to roll out that service in Austin in June. And we know it's also applied for some early permits that would allow it to eventually roll out something similar in California. So Musk really has this vision of a future where all cars are autonomous.

So in his brain and in the brain of Tesla's most bullish investors, they can potentially convert every single possible driver in the world to being a Tesla FSD subscriber. Tesla investors are used to betting on Musk's vision well before the products exist. That's where they see a lot of value in his companies. And Musk is moving forward on these ideas. He's poured money into a new kind of self-driving car he calls the CyberCab.

Tesla unveiled the model in October at a private event on a film lot in Los Angeles. We got the first view of the Cyber Cab. It's this tiny little two-seater and sort of gave a vision of what it would look like if a city was full of autonomous vehicles. Fifty robo-taxis carried guests around movie sets that looked like city streets. And from a stage, Musk addressed the crowd. All driverless, you'll be able to take a ride in the cyber cab. There's no steering wheel or pedals.

So I hope this goes well. Tesla says it'll start producing the cyber cab in 2026. But getting those autonomous cars on the road involves clearing regulatory hurdles. Right now, autonomous vehicle regulations are done on a state-by-state basis, which is something that Elon and his executives are eager to change. Here he is on a Tesla earnings call in October. Some things in the US are state-by-state regulated, like for example, insurance. change. Here he is on a Tesla earnings call in October. Some things in the US are state-by-state regulated, like for example insurance.

It's incredibly painful to do it state-by-state for 50 states. Musk wants the system to be centralized under a single federal rule. And he wants it sooner rather than later. It really needs to be at national approval is important. If there's a problem of government efficiency, I'll try to help make that happen. He said that if the Department of Government Efficiency was created, he'd try to shift regulations away from the state level. Musk also wants to get rid of certain environmental protections, he said is holding back his production

facilities at Tesla and his other companies. Musk has complained about this for ages across a range of different projects, especially when it comes to rockets. But basically, they just see local regulations, especially environmental regulations, as getting in the way of their ambitions. Now, Musk is in a much better position to actually make that happen. Musk has gotten very close to President Trump. Will that help him achieve some of these goals? That's the hope of people close to Tesla and investors in Tesla. What do you think this means for the future of Tesla?

Elon is famous for making these really bold claims about the companies. Recently, he's been talking a lot about the potential for Tesla's transition to be an AI and robotics company. He said that one day Tesla could ultimately be worth $30 trillion. But the future that Musk has painted of

an autonomous vehicle company is not yet something that customers can invest in. The cyber cab is not available to customers. FSD is not fully autonomous. We're still waiting for Tesla to roll out its ride-hailing service. So when you look at what's happening now, what does this tell you, Becky, about Musk's strategy here? Musk is a man of very strong convictions. I don't think we know for sure that it's all strategy. I think it's very likely that he just really believes in the politics that he's advocating

for right now, that it's sort of a philosophical position. But if you are an investor and you're looking toward the grand vision, it seems there's an argument that Tesla could benefit from less regulation. This episode has been updated. A previous version incorrectly stated that Elon Musk was a founder of Tesla. He's recognized by the company as a co-founder and is the CEO. The episode misidentified FSD as fully self-driving. It stands for full self-driving.

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Additional reporting in this episode by Sean McClean. Thanks for listening. See you tomorrow.