However, a few months later, instead of reaping a Trump dividend, Musk has run into a Trump risk as its chief business, Tesla, has begun to feel the heat of the Trump administration’s policies and stances.
Retaliatory tariff heat is scaring Tesla
Tesla has warned that it and other major American exporters are exposed to retaliatory tariffs that could be leveled in response to Trump’s aggressive use of tariffs. The Tesla comments reflect those of many US businesses concerned by Trump’s tariffs, but is notable because it is from Tesla.
The comments were made in a letter to the US Trade Representative’s Office and available on the office’s web site dated Tuesday, Reuters reported. It is among hundreds sent by companies to the office about US trade policy. It is not clear who at Tesla wrote the letter, which is unsigned but is on a company letterhead. Tesla did not immediately respond to a Reuter’s request for a comment. Tesla says it is important to ensure that the Trump administration’s efforts to address trade issues “do not inadvertently harm US companies.”
It says it is eager to avoid retaliation of the type it faced in prior trade disputes, which resulted in increased tariffs on electric vehicles imported into countries subject to U.S. tariffs. Trump is considering imposing significant tariffs on vehicles and parts made around the world in early April.
Tesla warns that even with aggressive localization of the supply chain, “certain parts and components are difficult or impossible to source within the United States.”
The automaker adds that companies will “benefit from a phased approach that enables them to prepare accordingly and ensure appropriate supply chain and compliance measures are taken.”
“As a U.S. manufacturer and exporter, Tesla encourages USTR to consider the downstream impacts of certain proposed actions taken to address unfair trade practices,” the EV maker says.
Can Tesla survive the Trump storm?
Tesla is facing consequences of its CEO’s hard sup[port for Trump and his radical role in Trump administration to cut waste and lay off staff. Tesla CEO Elon Musk appeared on the verge of tears during a recent Fox Business interview, visibly distressed as he discussed the mounting challenges facing his companies. Speaking with Larry Kudlow, Musk admitted that managing multiple businesses had become “extremely difficult”, as Tesla’s stock plunged 15.4%, marking its biggest drop since September 2020. Meanwhile, X (formerly Twitter) continued to struggle with technical and operational setbacks. The global slowdown in electric vehicle (EV) demand has further intensified Tesla’s troubles.
A wave of protests against Tesla, some peaceful and others involving acts of vandalism and arson, recently erupted across the US and beyond. Tesla showrooms, charging stations, and vehicles were targeted in multiple locations. On March 9, four Tesla Cybertrucks were damaged during a fire at a Seattle facility.
Beyond U.S. borders, 12 Tesla cars were torched in Toulouse, France, on March 2, and a Berlin-area Tesla factory was set on fire on March 5, with a far-left group claiming responsibility. Meanwhile, a grassroots initiative called “Tesla Takedown”, spearheaded by actor Alex Winter, has organized peaceful protests encouraging people to abandon Tesla products and stock. Musk has indicated without evidence that billionaires like George Soros and Reid Hoffman are behind the protests.
A recent Morgan Stanley investor survey has sent shockwaves through the market. A staggering 85% of respondents believe Elon Musk’s political activities are damaging Tesla’s business fundamentals. This sentiment, captured in a survey conducted on March 11, 2025, among 245 investors, reflects growing unease about the company’s future .
One of the biggest concerns highlighted in the survey is the decline in Tesla’s vehicle deliveries. The numbers tell a troubling story: 59% of respondents foresee a year-over-year drop in Tesla’s 2025 deliveries; and a mere 19% anticipate any growth; 21% predict a double-digit decline of over 10% y/y. This is a stark contrast to the optimism seen in January 2025, when investor sentiment was far more bullish. Now, concerns over slowing demand, market saturation, and internal challenges dominate the conversation.
Wedbush technology analyst Dan Ives, who has been Tesla’s biggest cheerleader for years, has now sounded the alarm over CEO Musk’s increasing forays into politics and other business interests appear to be hurting the company, according to a report.
In a letter to Tesla shareholders, Ives, who has had an “outperform” rating on the stock for years, cautioned that investors’ patience is “wearing very thin,” Fortune reported. His warning comes as Musk’s focus seems split, with his attention more on the Trump administration’s DOGE, while Tesla struggles with protests, vandalized stores, and customers selling their cars, according to Fortune. Ives, normally bullish on Tesla’s prospects, drew a darker picture in his most recent analysis. He highlighted that Musk has not been as visible at Tesla’s core operations in a difficult period for the company. Ives said, “A moment of truth is ahead for Musk and Tesla, and how Musk handles the next few months will be critical,” as quoted by Fortune.
Tesla shareholders want Musk to balance his time and show that he is Tesla’s CEO, Fortune reported. Ives also mentioned that, “This is not the time to just play in the DOGE sandbox. He needs to step up,” as quoted in the report.
Tesla investors cheered as Trump came to the defense of Musk’s carmaker by buying a Tesla car and showcasing five Teslas lined up in the White House driveway. The Tesla stock ended up closing up nearly 4% after one of the worst single day sell-offs in Tesla’s history a day earlier.
But experts warn the unusual presidential backing of a private company could backfire. “Tesla is becoming a political symbol of Trump and DOGE, and that is a bad thing for the brand,” Ives told AP. “You think it’s helping, but it’s actually hurting.”
Tesla shares have plummeted 45% in 2025 and on Monday tumbled more than 15% to $222.15, the lowest since late October, reflecting newfound pessimism as sales crater around the globe.
(With inputs from agencies)
