Tesla (TSLA) was once the undisputed leader in the electric vehicle market, synonymous with innovation, cutting-edge technology, and a forward-thinking ethos that attracted both environmentally conscious consumers and enthusiastic investors. However, recent developments have dramatically changed that narrative. Some analysts warn that Tesla’s brand reputation has suffered severe, potentially permanent damage, driven primarily by CEO Elon Musk’s polarizing political activities and controversial public positions.
In this article, we’ll explore why some market watchers firmly believe “the rot has set in” for Tesla stock, and whether the EV giant can realistically mount a comeback or if the brand’s best days are now behind it.
About Tesla Stock
Tesla (TSLA) is a prominent innovator dedicated to accelerating the global transition to sustainable energy. The Elon Musk-led powerhouse designs, develops, manufactures, leases, and sells high-performance fully electric vehicles, solar energy generation systems, and energy storage products. It also offers maintenance, installation, operation, charging, insurance, financial, and various other services related to its products. In addition, the company is increasingly focusing on products and services centered around AI, robotics, and automation. TSLA’s market cap currently stands at $908 billion.
Shares of the EV maker have lost about a third of their value year-to-date. Key factors behind this sharp decline include slowing EV sales, Musk’s controversial political activities, and escalating U.S.-China trade tensions.
Musk’s Brand Crisis Takes a Toll on Q1 Results
Tesla’s recent Q1 earnings report made it clear that CEO Elon Musk’s close ties to the Trump administration present a significant challenge for the Tesla brand. The EV maker reported a 71% drop in profits and a 9.2% decline in revenue for the first quarter. For a detailed breakdown of the company’s Q1 results, check out my latest TSLA article — here, we’ll just focus on the headline figures. With that, the Texas-based company’s automotive revenue took a major hit, falling 20% year-over-year to $13.97 billion and coming in well below estimates. While Musk attributed the downturn to factory retooling for the Model Y refresh, analysts point to brand damage as the real cause.
Indeed, Musk’s prominent position at the Department of Government Efficiency (DOGE) has led to protests, vandalism, and boycotts, damaging Tesla’s once-pristine brand image. Tesla showrooms in the U.S. and Europe have been the focus of protests, with some vehicles being shot at and set on fire. Notably, the protests in Europe followed Musk’s public support for far-right politicians in the region. All of this has driven away buyers. Kelly O’Keefe of Brand Federation describes it as “brand homicide,” noting Tesla’s transformation from a climate-conscious symbol to a politically divisive brand. Musk, however, brushed off the protests as “paid” and blamed broader macroeconomic challenges, while Tesla officials acknowledged that vandalism and “hostility” affected sales in key markets.
Meanwhile, Tesla’s share of the U.S. EV market has fallen from two-thirds to under half, according to Cox Automotive. Also, the company’s sales in Europe plunged 37.2% year-over-year in the first three months of this year, according to data from the European Automobile Manufacturers’ Association. And this comes at a time when electric vehicle sales are soaring across Europe, confirming a crisis linked to Musk’s polarizing political actions. In addition, Tesla is facing challenges in China, the world’s largest EV market and its second-largest market after the U.S., where it is losing market share amid intensifying competition, especially from BYD (BYDDY).
According to GLJ Research’s Gordon Johnson, “The damage [Musk] has done is 100% irreversible,” highlighting a permanent loss of buyers who once embraced Tesla for its eco-friendly image.
Musk Vows to Refocus on Tesla, But Analysts Remain Skeptical
Tesla investors breathed a sigh of relief during the Q1 earnings call when Elon Musk said he would “significantly” scale back his involvement in DOGE. Musk committed to dedicating more time to making Tesla the world’s most valuable company, saying he would only spend “a day or two a week” on government matters. This sparked a rally of over 5% in TSLA stock in the following trading session. However, many analysts have voiced concerns that the brand has a long road to recovery ahead, or that there may be permanent damage to TSLA, particularly as ongoing political controversy continues to weigh on its image.
Dan Ives of Wedbush Securities, a long-time Tesla bull, called it a “moment of truth” for Musk to navigate the “brand tornado crisis.” “I think Musk recognised between the tariffs and the brand damage, the clock struck midnight,” he told ABC News. Ives previously said he estimates a permanent 10% drop in sales due to Musk’s political profile, with 30% of the first-quarter’s decline attributed to brand-related issues. Also, JPMorgan’s Ryan Brinkman cut Tesla’s 2025 earnings forecast to $2.45 per share, citing “unprecedented brand damage.” In addition, Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, said, “[Musk’s] time is very valuable, and I think Tesla needs his attention. But it doesn’t change that people don’t want the Tesla brand. I don’t know how you fix that.”
Some analysts are even more skeptical about Tesla's brand recovery. Sue Benson, CEO and founder of The Behaviours Agency, said, “Musk could do a reversal on his political career and dedicate 100 per cent of his time to Tesla, but the rot has set in.” Benson noted that no amount of time Musk spends at Tesla will reverse the new perception many people have of him. “In fact, it could make things worse as it’s far too late to separate the man from the machine,” she added.
With that, Tesla risks becoming a cautionary tale of self-inflicted damage.
What Do Analysts Expect for TSLA Stock?
Wall Street analysts maintain a cautious stance on Tesla, assigning the stock a consensus “Hold” rating. Notably, there is a substantial variance in the recommendations from analysts covering TSLA stock. While 16 analysts give the stock a “Strong Buy” rating and two suggest a “Moderate Buy,” 13 analysts recommend holding, and 10 rate it as a “Strong Sell.” Analysts also significantly reduced their price targets following the company’s Q1 results, with the average target now at $283.14 — close to the stock’s current price.
