Introduction
The second term of Donald Trump has brought uncertainty to global trade, with significant impacts on key sectors like electromobility. At the heart of this turmoil is Tesla, Elon Musk’s company, which has both benefited from and suffered under Trump’s political decisions.
Trade Wars and Their Impact on Tesla
The trade war initiated by Trump, coupled with a volatile geopolitical environment and Musk’s controversial media relationship, has led to a substantial decline in Tesla’s global sales and stock value in early 2025.
- The intensifying trade conflict between the US and China, fueled by Trump’s arrogance in expecting Xi Jinping to initiate negotiations, has exacerbated the situation.
- Trump’s imposed tariffs, reaching up to 140% on various products—especially technology components and batteries—have increased Tesla’s manufacturing costs in the US and diminished its competitiveness abroad.
- Tesla, like many other companies in its supply chain, relies on Chinese suppliers for essential parts. The tariffs directly affect Tesla’s costs and performance.
- China’s retaliatory trade measures have allowed rivals like BYD, XPeng, and NIO to gain market share in local and regional markets, while China strengthens commercial ties with Malaysia and Vietnam.
The Trump-Musk Relationship: A Controversial Chapter
The relationship between Trump and Musk has been a contentious aspect of this story.
- Trump has publicly praised Musk, even driving a Tesla Model X for the presidential fleet, seen more as a political gesture than a commercial one.
- Post-Trump’s victory, Musk was appointed to lead the Department of Government Efficiency (DOGE), aiming to cut public spending and modernize government technology.
- Musk’s massive cuts and cancellation of federal contracts have sparked controversy and opposition within the cabinet.
- This proximity to Trump has drawn strong criticism from consumers and analysts, as Tesla is traditionally viewed as an innovative global company with technological leadership.
- Associating with Trump, a figure with distinctly different attributes, has alienated many Tesla customers who initially bought the car for reasons unrelated to political alignment.
Consequences for Tesla
These developments have significantly affected Musk’s automotive company.
- Tesla reported a 13% global sales decline in Q1 2025, particularly in Europe and Asia.
- The brand’s perception as “too close to power” has created resistance in politically neutral markets valuing apolitical consumption decisions.
- Tesla’s stock price dropped from $460 in December 2024 to $220 by the end of April, a more than 50% decline in just four months.
- Despite this, Tesla’s stock value remains higher than Ford ($9) and GM ($44) per share.
Key Questions and Answers
- Question:
Tesla’s future depends on Musk’s ability to reinvent the brand narrative, while some investors believe distancing from politics and strengthening presence in new markets is necessary. However, separating from Trump, a political figure Musk cannot easily distance himself from amicably, poses challenges.
