Tesla's share price has plummeted by more than a third over the past month, amid growing controversies surrounding CEO Elon Musk. The decline is linked to a backlash against Musk following his public support for Germany's far-right Alternative für Deutschland party. Musk's recent actions, including theatrically brandishing a chainsaw at a conservative conference and accusing British Prime Minister Keir Starmer and other senior politicians of covering up a scandal involving grooming gangs, have further intensified scrutiny.
The situation is compounded by the ongoing impact of trade policies initiated under former President Donald Trump. The tariffs imposed affect vehicles and automotive parts globally, creating potential challenges for manufacturers like Tesla. In response, Tesla has warned that these trade measures could expose the electric carmaker to retaliatory tariffs, which would impact not only Tesla but also other US automotive manufacturers.
“US exporters are inherently exposed to disproportionate impacts when other countries respond to US trade actions.” – Tesla
BMW, another prominent automaker, has also faced significant financial setbacks. The company reported a 37% decline in net profits to €7.68 billion (£6.4 billion) in 2024, with overall car sales dropping by 4% to 2.45 million. The sales of BMWs and Minis in China fell by 13.4% year on year. The company's forecasts have accounted for all tariffs up to March 12, including levies on steel and aluminum, as well as a 20% tariff on China and a 25% tariff on Canada and Mexico.
In light of these challenges, Tesla has urged the Office of the United States Trade Representative (USTR) to thoroughly assess the downstream impacts of proposed trade actions.
“For example, past trade actions by the United States have resulted in immediate reactions by the targeted countries, including increased tariffs on electric vehicles imported into those countries.” – Tesla
Meanwhile, Donald Trump has expressed his intention to purchase a "brand new Tesla," while attributing the boycotting of the EV company to "radical left lunatics." Despite this endorsement, Tesla continues to struggle in China, where local EV producers like BYD have captured market share.
BMW anticipates an earnings margin for cars between 5% and 7% this year. However, the company acknowledges that a challenging competitive environment, along with trade and geopolitical developments, could significantly impact business performance.
“A challenging competitive environment, trade and geopolitical developments could all have a significant impact on business performance.” – Tesla