Will Musk’s Ties to Trump & DOGE Lead to Long-Term Problems for Tesla?

On March 10, Tesla shares dropped more than 15%, hitting their lowest point since late October. On March 11, Trump gave a speech on the White House driveway to declare his support for the “great patriot” Tesla CEO Elon Musk. Trump’s endorsement and subsequent Tesla purchase gave the electric automaker’s stock a much-needed boost – it rebounded that day, closing nearly 4% higher.

Musk was announced as the public face of the Department of Government Efficiency on January 10, a move that quickly sparked controversy. Critics argued that his deep involvement in private enterprises including Tesla and SpaceX posed significant conflicts of interest. Some fear his influence could lead to reduced oversight on Tesla’s self-driving technology or bias in awarding lucrative government contracts to his own companies.

In Trump’s speech about Musk earlier this week posted to Truth Social, the president declared that “he’s been treated very unfairly” and claimed, “our country’s going to be very strong very soon because of a lot of the things that he’s done” within DOGE. However, not everyone agrees.

Protests escalate as Tesla faces public backlash

Since mid-February, Tesla showrooms across the U.S. have been targeted by protests aimed at disrupting sales in response to Musk’s political activities. While mostly peaceful, some demonstrations have turned violent, with reports of vandalism, fires, and Molotov cocktails.

On March 8 alone, 50 protests were scheduled, according to the group Tesla Takedown. Additional demonstrations are planned across the U.S. and internationally, including in England, Spain, and Portugal.

Possible long-term impact to Tesla

While this week’s stock bump suggests Tesla’s indirect ties to Trump can bring short-term gains, the relationship could ultimately damage the brand’s long-term prospects. If protesters succeed at denting the automaker’s bottomline — on top of it being outpaced by competitors in China and elsewhere — it seems Tesla’s market value will decline.

A low stock price reduces the value of the discounted shares that Tesla offers its employees as an incentive, potentially leading to problems attracting and retaining staff. It also reduces the funds the company can raise from share sales, limiting its ability to invest in research and expansion. Given Tesla’s current sales figures in both the U.S. and Europe, further expansion seems unlikely — shares have plummeted by 45% so far this year.