Many experts and investors warn that CEO Elon Musk is at a crossroads as Tesla prepares to announce its investment earnings report this week.
The world's leading electric vehicle manufacturer, Tesla is expected to announce its Q1 business results this Tuesday (U.S. time). And before what is seen as a very crucial moment for Tesla, many analysts, including Dan Ives of Wedbush Securities, are sounding a loud alarm, calling for Elon Musk to make a decision right now.
"Musk needs to leave the government, withdraw from DOGE, and return as Tesla's full-time CEO," Ives wrote in a newly released report.
"Tesla is Musk and Musk is Tesla... Anyone who thinks that the brand damage caused by Musk is not real should spend time talking to car buyers in the U.S., Europe, and Asia... You will think differently after those discussions," Dan Ives said.
Two weeks ago, Ives forecast that Tesla's stock would drop to 43%, citing the brand crisis caused by the trade policies of Musk and U.S. President Donald Trump.
Ives' biggest concern is the possibility that Tesla could get swept up in the wave of opposition to President Trump's tariff policies in China. The billion-strong market is where Tesla generated over 1/5 of its revenue last year.
In addition, Elon Musk is also the face of President Trump's efforts in the campaign to cut personnel, the scale and scope of the federal government. This has angered many progressive Americans. And this, according to Dan Ives, represents important customers for the leading electric vehicle manufacturer in the U.S.
"Unfortunately, Tesla has become a global political symbol," Mr. Ives wrote. The analyst pointed to several pieces of evidence for this argument: Tesla's stock has been "crushed" since Mr. Trump took office, the number of cars delivered in the company's first quarter was "very poor," and protests against Tesla continue.
Ives stated that Tesla faces "the potential for permanent demand destruction of 15%-20% for future buyers of the company's cars." The biggest reason for this is the brand damage caused by Elon Musk.
According to statistics, Tesla's stock has dropped 43% since January 17. When the company reports its business results on Tuesday, Tesla will face major questions regarding sales in 2025, the progress of its self-driving car plans, and how tariffs will impact profitability.
"Musk's role in the White House will weigh heavily on everything," Ives noted.
Nevertheless, Ives said he remains optimistic about Tesla, calling it one of the "most groundbreaking technology companies globally in the coming years." However, he stated that Tesla needs its "most important asset" - Elon Musk - to return to work full-time at the company.
"We see this as a crossroads: if Musk leaves the White House, there will be permanent brand damage, but Tesla will have its most important asset. The strategic thinker returns as CEO full-time," Ives wrote.
"If Musk chooses to stay in the White House, that could change Tesla's future, and brand damage will increase," the expert added.
Tariffs disrupt Tesla's plans to produce multiple new vehicle models.
Reuters quoted some sources as saying that Tesla's plan to bring many components for assembly of the Cybercab and Semi electric trucks from China to the U.S. has been halted after President Donald Trump raised tariffs on goods produced in the billion-population country to 145%.
According to Reuters, this move could disrupt plans for mass production of Tesla's highly anticipated vehicle models. According to CEO Elon Musk's assessment, these models will "drive growth for the American automaker."
Sources say that Tesla is willing to accept additional tariffs of up to 34% on goods produced in China. However, tariffs exceeding 100% are causing plans to be halted.
Mr. Trump imposed an 84% tariff on American goods on April 9, which later increased to 125%, raising the total tariff on Chinese goods exported to the United States to 145%.
Sources said that Tesla is expected to start receiving shipments of components next month, aiming to produce prototype versions of the Cybercab and Semi models in October this year, followed by mass production in 2026. The Cybercab will be produced in Texas and the Semi in Nevada.
With the new developments, it is unclear how long the halt on shipping components to the U.S. will last.
In the past two years, Tesla has increased the share of domestically sourced components for its factories in the U.S. due to concerns about the possibility of the U.S. imposing tariffs on China.
Speaking at the White House on Monday, Mr. Trump stated that he is considering revising the 25% tariff on cars and auto parts imported from Mexico, Canada, and some other places. This tariff could increase the cost of a car by thousands of dollars, and companies "need a little time to move production back to the U.S."
