Tesla Fallout Proving CEO Activism is FraughtTesla Fallout Proving CEO Activism is Fraught

Tesla is seeing rapidly declining sales in multiple markets across the world, sending shares lower. Analysts who track the company’s stock say boycotts and demonstrations against Tesla and CEO Elon Musk are hurting the company, but also point to its aging product line, as well as the failing of the Cybertruck.

Tesla’s issues connected to Musk’s political activity affirm a long-standing principle among CEOs of publicly traded companies that warns against becoming too overtly political to the point where many corporate leaders historically do not even make their own political contributions, but rather funnel them through corporate political action committees, and now through outside PACs that do not release their names.

Research Shows CEO Activism is Fraught

Research from the University of Iowa, for example, indicates that investors prefer CEOs who refrain from commenting on controversial political issues. The study found that “silence is viewed as favorably as expressing opinions aligning with investors' beliefs, suggesting that political neutrality may preserve investor confidence.” This underscores the potential risks associated with CEO activism.

Additionally, overt political involvement by a CEO can impact the company internally. A study published in the Journal of Business Ethics (link)highlights that CEO activism can positively influence employee engagement if employees' values align with the CEO's stance. Conversely, if there is a misalignment, such activism can decrease employee commitment and negatively impact culture.

Research from UCLA's Anderson Review suggests that CEO activism can alienate customers, especially those who disagree with the CEO's position. The study found that such activism leads to “stronger reactions among those who oppose the CEO's stance, potentially harming the company's brand and sales.”

But Musk may be the most self-directed CEO in U.S. business history, even defying the Securities and Exchange Commission and publicly criticizing other regulators and judges on multiple occasions.

Tesla has experienced notable declines in vehicle sales across several key markets, including California, the broader U.S., Germany and the European Union, all attributed to consumers not wanting to be associated with the Tesla brand.

In 2024, Tesla's vehicle registrations in California, a key market for the automaker, decreased each quarter, with an annual drop of 12%, according to the California New Car Dealers Assn. (CNCDA). The Model 3 sedan saw a 36% decline.

Nationally, Tesla experienced its first annual sales decrease in the U.S., with a 12% reduction for the year and an 8% drop in the fourth quarter, according to Cox Automotive.

Across the EU, Tesla's sales have been under pressure. Sales in Europe tumbled 45% in January from a year earlier, while its rivals’ rose by over 37%, according to the European Automobile Manufacturers’ Assn. (ACEA). Sales were down 10.8% in 2024, while overall sales in Europe were down just 1.3%.

Tesla's sales in Germany, where Musk supported and amplified the cause of the far-right Alternative für Deutschland (AfD), the pro-Russia and anti-immigration party, have significantly declined. In January 2025, sales dropped by 59.5%, with only 1,277 new registrations, according to the ACEA. The situation worsened in February, with a 76.3% year-over-year decrease, totaling just 1,429 units sold.

In France, sales plummeted by 63% in January 2025 compared to the previous year. Similarly, in Norway, one of Tesla’s earliest overseas markets, Tesla's sales declined by 44.4% during the first two months of 2025, despite a 53.4% growth in the country's overall EV market, per ACEA. A late January survey conducted by an electric vehicle review website, Electrifying.com, found that 59% of Brits who either own EVs or intend to purchase one wouldn’t buy a Tesla because of Musk.

The Elephant in the Room

Tesla reports first-quarter financials on April 22 and will have to answer analysts concerns on April 29.

Dan Ives, an analyst at Wedbush, has urged Musk to “step up” as Tesla's CEO, advising him to balance his political endeavors with overseeing the company. This call to action follows significant stock declines and concerns over Musk's minimal presence at Tesla facilities. A long-time Tesla bull, Ives wrote recently that Musk’s political activity is the “elephant in the room” for the brand.

In China, Tesla's sales are also facing huge challenges even though Musk has been friendly toward China President Xi Jinping. In February 2025, Tesla built and sold 30,688 vehicles, marking a 49.16% drop from the 60,365 units sold in February 2024. This suggests a shrinking market share for Tesla in one of its most crucial markets.

All of these declines have depressed Tesla shares. Tesla's stock reached its 52-week high of $488.54 on Dec. 18, 2024. By March 11, the stock had fallen to $230.58. This represents a decline of approximately 52.8%. The Dow Jones Industrial Average over that same period was down 6.46%.

As recently as October, Musk said he expected 20% to 30% annual sales growth, implying as many as 2.3 million cars sold per year. Analysts base their share price targets on that guidance. But at the current rate, Tesla sales will significantly under-perform that target.

“Customer retention will be key in 2025 as customers may begin to look for an “Alternative for Tesla,’” says Matthias Schmidt, a Berlin-based EV analyst. But a large percentage of Tesla early adopters were politically liberal “green-oriented” buyers.

Retention could be as difficult as scoring new sales. Resale value on Tesla vehicles continues to fall. The average price of a pre-owned Tesla has been in steady decline for three years. In 2022, a used Tesla sold for more than $70,000 but dropped as low as $26,000 last fall. Data from is expected to drop further as Tesla discounts more and more sellers hit the market.

Social Pressure

Demonstrations and even marketing tactics of some of Tesla’s rivals are spotlighting the social pressure that Tesla owners and employees are facing.

Polestar, for example, has targeted Tesla owners with a special incentive of up to $20,000. Kia in Norway is poking at Tesla and Musk with recent social media posts. Kia Norge took a jab at Musk via Instagram featuring its 300-mile (483-km) EV3 with a bumper sticker on the back that reads: "I bought this after Elon went crazy." Kia took the post down, but not before it went viral.

There have been reports of vandalism and protests at Tesla stores too, driving news and social media content. For instance, a Tesla store in Toulouse, France, suffered significant damage when a dozen vehicles were burned, with arson suspected amid global protests. In the U.S., Tesla showrooms and charging stations have been targeted across the country, leading to police investigations.

President Trump, in an act to help his fund-raiser and vocal supporter Musk, staged a Tesla event at the White House on Tuesday, telling the country on camera he was buying a Tesla (though the president does not drive). He also errantly called boycotts and protests aimed at Tesla “illegal.”

It may not move the needle for Tesla. Studies have demonstrated that political conservatives are significantly less likely to purchase EVs compared to liberals. A 2023 Gallup poll revealed that 71% of Republicans would not consider buying an EV, whereas only 17% of Democrats shared this reluctance.

With sales declining and trade tensions between the U.S. against Mexico and Canada driven by Trump, it could affect Tesla’s previously announced plan of building a factory in Mexico.

Capacity Problems Loom

Tesla was already facing a manufacturing capacity issue before the boycotts and backlash.

Combining these figures, Tesla's estimated manufacturing capacity outside of China in 2024 was around 1.6 million vehicles annually. Capacity inside China at Shanghai has capacity for 750,000, according to Tesla.

That puts Tesla’s capacity utilization outside of China at about 65% in 2024, before the precipitous slide in sales and the focus on Musk’s political activity since the third quarter of last year.

Musk says he will remain in the Trump Admin. until next year.

In a recent interview with Fox Business host Larry Kudlow, Musk discussed the challenges of managing his various business ventures, including his role in the Department of Government Efficiency (DOGE). He acknowledged that running his businesses has been "with great difficulty."