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CEO Elon Musk needs to step up and do these two things to resolve Tesla’s (TSLA-0.78%) “crisis” over his leadership of the Department of Government Efficiency, according to Wedbush Securities analyst Dan Ives.
“If you agree or disagree with DOGE it misses the point that by Musk spending 110% of his time with DOGE (and not as Tesla CEO) since President Trump got back into the White House this has essentially turned Tesla into a political symbol.... and this is a bad thing,” Ives wrote in a late Wednesday note to investors.
Outrage over DOGE’s cost-cutting measures, which include mass layoffs and forceful actions across federal agencies, has sparked weeks of “Tesla Takedown” protests. Tesla’s stock has sunk 38% year-to-date, first-quarter sales estimates have been lowered by several analysts, and the company was removed from an auto show over fears of a protest.
Read more: Tesla’s Elon Musk problem
Although the groups behind the most popular protests emphasize nonviolent action, vandalism against Tesla property has ramped up. Tesla electric vehicles and dealerships have been vandalized across the U.S., while a new website claims to expose the personal information of anyone who currently owns a Tesla.
Republican members of Congress – including Tesla stockholder Rep. Marjorie Taylor Greene of Georgia — have defended Musk and Tesla, while Commerce Secretary Howard Lutnick recommended people buy Tesla stock on Wednesday night. President Donald Trump and his attorney general have called attacks on Tesla acts of domestic terrorism.
While conservative influencers and some analysts say Trump’s support for Tesla could help boost sales, it’s still unclear whether there will be a pronounced effect. Traditionally, Republicans have been less likely than Democrats to buy electric vehicles, although conservatives have always been part of Tesla’s consumer base.
“Trump buying a Tesla with an event at the White House last week is great political theater....but it does not resolve the current brand/ demand problem for Musk and Tesla and in some ways makes it more of a political lightning rod issue for Tesla,” Ives said.
The first thing Musk needs to do, according to Ives, is make a formal announcement that he will balance his time working on DOGE with Tesla. That could help lower DOGE’s effect on Tesla. The department is scheduled to be dissolved on July 4, 2026.
Although Musk has always had a variety of other duties — such as leading the $44 billion X, $350 billion SpaceX, or potentially $75 billion xAI — DOGE has been by far the role with the most potential to damage his and Tesla’s brand. Tesla’s brand value plummeted after Musk began openly supporting Trump last year, according to data from Brand Finance.
“We struggle to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly,” JPMorgan (JPM+0.20%) analysts recently wrote of DOGE’s impact on Tesla.
Tesla also needs to drive up investors’ confidence in the company by announcing a roadmap for new, cheaper EVs, which have been discussed for years and are set to launch in the first half of 2025. Ives said that, combined with guidance on projects like an autonomous rideshare service roll-out in June, would help reassure stockholders.
“[T]here is one person Tesla investors need to hear from...Musk,” Ives said. “Musk needs to change course here...Tesla’s future depends on it,” he added.