It’ll take more than a White House PR stunt to turn Tesla around
Elon Musk represents a reputational risk to Tesla and the company’s value could soon collapse to near zero, says John Caudwell
Tesla will need a lot more than a PR stunt on the White House driveway to reverse its current despairing fortunes as anti-Elon Musk and anti-American trade war sentiment reverberates around the globe.
While we have seen a share price rally after what can only be described as a catastrophic week for Tesla, you don’t need to dig too deeply to see that the numbers just don’t stack up. This is a dead cat bounce – a brief rise in a company’s share price during an otherwise downward trend.
Whichever way you cut it, Tesla looks like a lame duck stock and a company in more than free fall. By my reckoning, its value – once at the heady heights of $1 trillion-plus – could be zero.
Without some kind of silver-bullet, such as a much-anticipated driverless vehicle or ‘robotaxi’, the future earnings potential currently propping up the Tesla share price, and in turn the company’s value, may be headed unstoppably downward.
Look a little deeper and unpick Tesla’s Net Asset Value (NAV) – the total value of company assets minus the value of its liabilities to give a value for shareholder equity – and you see a grim picture: the NAV per share is substantially smaller than its price per share.
So where are Tesla’s future earnings going to come from as the world looks to be shunning its vehicles in favour of better EV deals from manufacturers in Asia and the traditional automotive brands are now fighting back? It’s a question that would keep me awake at night if I were Musk.
At the heart of this crisis for Tesla and Musk is a whopping great reputational issue – and it could already be too late to fix. When it comes to reputations, we know all too well they are hard won but easily lost.
“Don’t buy Tesla”
Looking at Tesla, with some owners celebrating on social media sending their vehicles back in protest at his political activities, you must wonder whether Musk is failing to read the room as well as the company’s numbers.
Meanwhile, as Trump was calling his newly purchased Tesla “beautiful” at a White House media photocall, sacked federal workers were standing just yards away holding up “Don’t buy Tesla” placards.
And therein lies the heart of the matter: people are turning against Musk, and they are turning against Trump’s America with its hardline on tariffs and its Putin-favoured intervention in the war in Ukraine.
Tesla’s brand, once considered by some (but not by me) as untouchable, is now tarnished, and its future feels uncertain at best. But, putting reputational matters aside for a moment, let’s look at the numbers.
At this point, I should declare a more than passing interest. I have studied Tesla’s form along with the shifting dynamics in the global EV market – and doubted the company’s longevity for a long time. And, as the owner of a stationery Tesla, awaiting emergency mechanical surgery, I am constantly looking at alternative EVs.
After a brief post-US election surge in late 2024 – when investors speculated that Musk’s ties to the incoming Trump administration could benefit Tesla – the stock has tumbled by around 45 per cent since its December all-time high.
Earlier this month, Tesla was the worst-performing stock on a day when shares plunged more than 15 per cent amid broader market fears.
Despite this drop, some investors consider the stock to still be overpriced, since much of its once $1 trillion-plus peak valuation was based on the company’s high price-earnings (PE) ratio, and that in turn was predicated on future stellar product launches, such as the “robotaxi” and other AI-based innovations – which have yet to materialise.
A sudden driverless vehicle launch could jump-start the stock again and be that silver bullet Musk needs – but I’d say he has more chance of buying a winning lottery ticket at the weekend.
Whether it’s luck or a quick smart move, Musk needs something urgently to stop the rot. The Asian EV onslaught has been in full swing for some time now, and it’s kicking him hard where it hurts. Chinese EV manufacturer BYD has surpassed Tesla in total EV sales based on data for the last quarter of 2024 (BYD shifting 526,000 vehicles compared to Tesla’s 484,000). Another Chinese rival, Nio, has launched a direct challenger to Tesla’s Model Y – called the Onvo – at a much lower price point.
In Scandinavia, Tesla registrations have plummeted by as much as 48 per cent year-on-year, while in France they have dropped by 45 per cent. Even in China, Tesla’s February 2025 deliveries fell by 50 per cent, despite the broader EV market surging by 80 per cent in the same period. This, of course, is ahead of any potential trade war or tariffs the Chinese could impose.
When Musk’s cars stop selling Trump will be harder to get hold of than the Tesla customer relations department when you have a mechanical problem to report
And where will Elon’s buddy Trump be by then? I predict harder to get hold of than the Tesla customer relations department when you have a mechanical problem to report. There are signs of growing strains on that relationship: its likelihood for meltdown was only ever about ‘when’ not ‘if’ in my opinion.
Once upon a time, Elon Musk was lauded by the world’s CEOs and entrepreneurs for being a genius disruptor. What’s clear to me, and probably everyone else by now, is that from a business perspective, what he’s most rapidly disrupting now is his own legacy – and the future of Tesla itself.
John Caudwell is an entrepreneur