Tesla Faces Investor Scrutiny Amidst Political Turmoil

Firm’s Valuation Halved as Key Backer Sells Holdings

Investor confidence in Tesla is waning, with some significant backers trimming their stakes due to a confluence of factors including heightened competition, reduced subsidies, and a perceived political backlash against the company and its leader, Elon Musk.

Investor Divestment Signals Concerns

Mr. Gerber, president of Gerber Kawasaki Wealth and Investment Management, an early proponent of Tesla, has been progressively decreasing his firm’s exposure to the electric vehicle giant. “We’ve had to sell more Tesla stock and we’re going to continue to sell more,” Mr. Gerber stated. “The stock’s wildly overvalued and, still just on a business level, has lots of issues.”

Market Plunge Follows Political Involvement

Tesla’s market capitalization experienced a significant decline in the initial months of 2025, coinciding with Mr. Musk‘s involvement in the Trump administration. By mid-March, the company’s market value had effectively been cut in half. While the stock has seen a slight recovery since Mr. Musk signaled his potential departure from government service, its current price remains two-thirds of its December peak.

Innovation vs. Valuation: A Divided Opinion

Conversely, other investors maintain a more optimistic outlook, emphasizing that Tesla’s valuation should extend beyond immediate sales and productivity figures. They highlight Mr. Musk‘s innovative prowess, particularly in the burgeoning fields of artificial intelligence and autonomous driving technology, which he views as the automotive industry’s next significant frontier.

The company recently conducted trials of its self-driving RoboTaxi in Austin, Texas, encountering mixed outcomes. Several incidents led to an investigation by the US road safety agency, yet many investors remain undeterred by these challenges. Tesla’s stock performance has been subject to volatility, with a significant drop occurring after Elon Musk‘s involvement in government affairs, as detailed by a recent market analysis.

Dan Ives, a senior analyst at Wedbush Securities and a consistent Tesla supporter, has not wavered in his positive assessment. “The Trump feud is not getting in the way of this in our view. We believe Tesla remains the most undervalued AI play in the market today,” Mr. Ives, alongside fellow analyst Sam Brandeis, penned in a recent report. He further acknowledged that state and federal tax incentives were fundamental to Tesla’s establishment, stating they are “the roots of Tesla” without which the company’s current standing would be impossible.

“It’s the biggest disruptive technology company in the world, along with Nvidia.”

—Dan Ives, Financial Analyst

Despite the technological advancements, Mr. Gerber remains skeptical, expressing concern that Mr. Musk‘s political pivot has permanently damaged the brand he helped build. Mr. Gerber shared his personal struggle to find a buyer for his Cybertruck, purchased just last year, illustrating the broader impact of public sentiment. “I actually really like it,” Mr. Gerber admitted. “That said, I don’t like the way it makes me feel when I drive it because people hate Tesla so much.”