Tesla's stock took a brutal hit this week, dropping over 7% in a single day, after Wedbush analyst Dan Ives sounded the alarm with a stark warning: it’s a “code red” moment for the electric vehicle giant. With earnings around the corner and Elon Musk more entangled in Washington politics than in Fremont or Austin, Wall Street is losing patience — fast.
Shares of Tesla plunged sharply on Monday morning, positioning the automaker as the worst performer on the S&P 500. The market reaction wasn’t just about earnings jitters. Investors are increasingly worried that Elon Musk, the company's visionary CEO, is no longer fully focused on the company’s future. His dual role — running Tesla while also serving as a special government employee under President Trump’s administration — is now under fire from shareholders, analysts, and even car buyers themselves.
The Musk Problem: Too Much Government, Not Enough Gigafactory
Dan Ives, who has long been one of Tesla’s biggest supporters, delivered his most biting critique yet. In a note to clients, he urged Musk to “leave the government, take a major step back on DOGE, and get back to being CEO of Tesla full-time.” According to Ives, Tesla is bleeding brand equity at a dangerous rate. The automaker, once the face of innovation, clean energy, and futuristic tech, is now facing what he called a “permanent demand destruction” problem — up to 20% — thanks to Musk’s increasingly polarizing political persona.
The timing couldn’t be worse. First-quarter delivery numbers were already a mess, and Musk’s association with Trump’s Department of Government Efficiency (DOGE) has sparked protests in key markets. Europe and Asia — once growth pillars for Tesla — are starting to sour on the brand. In China, where Tesla generates more than 20% of its revenue, Trump’s tariff war is threatening to cut the company off at the knees.
Brand Damage in the Age of Polarization
Tesla, more than any other automaker, relies on its image. It’s not just about electric cars. It’s about identity. For years, Tesla drivers were seen as tech-savvy progressives leading the charge toward a cleaner, smarter future. But now, that image is cracking. Musk’s increasingly public alignment with Trump-era politics and controversial roles in federal government reform have made Tesla a political lightning rod — and alienated a large chunk of its customer base.
Ives warned that the backlash is real and growing. “Anyone that thinks the brand damage Musk has inflicted is not a real thing, spend some time speaking to car buyers in the US, Europe, and Asia. You will think differently after those discussions,” he wrote. And it’s not just hypothetical. Sales are slumping. Deliveries are down. And now, production delays are looming over what was supposed to be Tesla’s big comeback — the affordable Model Y.
The Delayed Model Y: A Missed Opportunity
Reuters added fuel to the fire last week, reporting that Tesla will delay the production launch of its lower-cost Model Y by several months. This vehicle was supposed to be the cornerstone of Tesla’s strategy to win back market share and revitalize sagging demand. Investors were banking on it. Consumers were waiting for it. But now, it’s on hold — and the market is reacting.
The delay couldn’t have come at a worse moment. With competition heating up from every corner — China’s BYD, Ford’s growing EV line, and the European EV resurgence — Tesla’s window to reclaim dominance is narrowing. Analysts had hoped the cheaper Model Y would reignite excitement. Instead, they’re left wondering what comes next — and who, if anyone, is actually driving the ship.
Earnings on Deck: All Eyes on Tuesday
This Tuesday’s earnings call could define the next chapter in Tesla’s story. On the docket: how tariffs are biting into profit margins, whether autonomous driving progress is living up to the hype, and if there’s still life left in Musk’s long-promised robotaxi network. But behind every question looms a larger one: will Elon Musk be there to answer them?
As a special government employee, Musk’s time in the Trump administration is limited — 130 days per year. Reports suggest he may step back once that period ends. But even then, the damage may already be done. Tesla’s board, investors, and public backers are all waiting to see whether Musk will truly recommit to the company or remain distracted by political crusades.
The Analyst’s Dilemma: Still Bullish, But Cautious
Despite his harsh critique, Dan Ives hasn’t turned bearish on Tesla — not yet. He still believes the company is one of the “most disruptive technology companies on the globe over the coming years.” But that optimism now comes with a caveat. Ives slashed his price target for Tesla by a staggering 43% earlier this month, citing a deteriorating brand and mounting macro risks.
That price cut wasn’t just a slap on the wrist. It was a signal — from one of Tesla’s biggest defenders — that the current trajectory is unsustainable. Musk, once considered untouchable, now faces an urgent choice. Does he double down on Tesla and repair the damage? Or does he gamble on politics and risk alienating the very customers who made him a household name?
Tesla at a Crossroads
The coming weeks will be critical. Musk’s presence on the earnings call will be closely watched, not just for what he says but for what it signals. Will he acknowledge the brand issues? Will he announce a concrete timeline for stepping away from DOGE? Or will he try to downplay the concerns and stay the course?
Tesla is no stranger to controversy, but this time feels different. The market is no longer willing to ignore the noise. Shareholders want action. Analysts want clarity. And consumers — the ones who actually buy the cars — want the old Tesla back. The innovative, daring, forward-thinking Tesla that made EVs cool in the first place.
Musk may still be Tesla’s greatest asset. But right now, he’s also its biggest liability.
Conclusion
Tesla’s latest stock plunge isn’t just about missed earnings or delayed vehicles. It’s about trust. It’s about leadership. And it’s about a brand that, once invincible, is now fraying at the edges. The upcoming earnings report will offer a glimpse into the company’s financial health. But the real question is whether Musk can — or will — steer Tesla back on course. Investors, analysts, and customers alike are holding their breath. Because what’s at stake now is bigger than quarterly profits — it’s Tesla’s identity.
