Elon Musk Faces Backlash: Activists Boycott Tesla Over Right-Wing Ties, Citing Unfixable Issues

Tesla shares surged nearly eight per cent yesterday after CEO Elon Musk pledged to refocus his attention on the electric automaker, despite backlash against the billionaire for his political actions in recent months.

The wealthy individual pledged to decrease their involvement with U.S. President Donald Trump and the Department of Government Efficiency (DOGE) to only one or two days each week starting next month.

Even though the markets responded positively, there are ongoing worries that Musk’s adoption of right-wing politics may have inflicted irreparable harm on Tesla’s reputation.

If the stock recovers, it could contribute over $50 billion (£37.2 billion) to Tesla’s current market capitalization of $766 billion (£570.6 billion).

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Investors appreciated Musk's pledge to dedicate more time to Tesla, yet specialists caution that the firm must navigate a challenging course to rebuild its damaged reputation.

The firm experienced an astonishing 71 percent decline in net earnings along with a significant reduction in car sales revenues. Since reaching its peak in December, Tesla’s market value has dropped by over $500 billion (£372.4 billion), as stated by Reuters.

The dramatic decline reflects growing investor concerns that brand damage could hurt sales for a second consecutive year. Further calls for a Tesla boycott from campaigners could gain traction and harm the brand further.

Even with these difficulties, Tesla’s stock price keeps trading around 89 times projected earnings, substantially above those of conventional car manufacturers such as Ford and General Motors, along with other major technology companies known as part of the "Magnificent Seven."

The firm's monetary difficulties have increased oversight of Musk's split focus between Tesla and his governmental engagements.

Musk’s backing of Trump and his connection to conservative movements have distanced customers who were previously supportive of Tesla’s environmentally-conscious goals. This political dispute has sparked significant backlash, manifesting as demonstrations and acts of vandalism at various Tesla dealerships.

"The negative effects of vandalism and unjustified aggression towards our brand and employees have been felt in specific regions," admitted Tesla's financial head, Vaibhav Taneja.

The company also warned that "changing political sentiment could have a meaningful impact on demand for our products in the near-term".

Some analysts suggest that accelerating EV adoption in conservative states might offset falling sales in California and other traditional Tesla strongholds.

Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management and a prominent investor, said: "His time is very valuable, and I think Tesla needs his attention. But it doesn't change that people don't want the Tesla brand. I don't know how you fix that."

Marketing specialist Sue Benson provided an even more pessimistic outlook on Tesla's future. She stated, "Even if Musk were to completely abandon his political ambitions and focus all his efforts on Tesla, the damage is done. There’s nothing a product can address at this point, and spending additional time in Tesla’s headquarters won’t change how many view Musk now."

Tesla confirmed its intention to introduce an economical car model in early 2025; however, they cautioned that the increase in production might occur at a slower pace than expected.

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The firm will reassess its annual delivery projection during its July earnings release due to evolving worldwide trade regulations.

Musk mentioned that he has pushed for reduced tariffs, however, the ultimate choice remains with Trump. He also stated that he anticipated some unforeseen obstacles occurring during the year.

As Tesla moves into an era where attracting consumers and offering affordable products are crucial for expansion, concerns over brand image have escalated. Experts continue to doubt whether Tesla can distance itself from Elon Musk’s political engagements, which may impact public perception.

Gabor Schreier, Chief Creative Officer at Saffron Brand Consultants, stated: "Unless the brand sheds the political burden it has accumulated, Musk’s particular share of redirected attention towards Tesla might not make much difference."