Tesla, the pioneering electric car maker that has consistently ranked as one of the world’s most valuable companies, is reeling. Recent reports show Tesla’s first quarter 2025 earnings dropped 71 percent compared to the same period in 2024.
Analysts attribute Tesla’s alarming losses to several factors, including a decline in car prices and increased competition. However, they also point to Tesla CEO Elon Musk’s involvement with US President Donald Trump and his administration as an issue contributing to Tesla’s woes.
Musk was an outspoken supporter of Trump during his campaign and assumed a leading role in Trump’s Department of Government Efficiency (DOGE) after the election. His involvement with DOGE, which is focused on reducing overspending within the federal government, has sparked demonstrations and other public criticism across the nation.
Musk appears to understand that his political activities are causing problems for his company. On a recent company conference call, the Tesla CEO admitted that his connection with President Trump was causing what he called “blowback.” His plans, he said, are to cut back on his involvement with DOGE starting as early as May 2025.
But reducing the time he’s spending with Trump may not be enough to turn Tesla around. Musk’s political involvement has led to a trust crisis for his company. To regain consumers and drive an increase in sales, Musk will need to lead a PR campaign focused on restoring the Tesla brand.
Resurrecting the company’s core values
Tesla’s core mission is clearly communicated on its website. The title of a company blog post from Earth Day 2025 says it succinctly: “We’re Committed to Building a Sustainable Future.”
Many consumers are drawn to the electric vehicle (EV) market because they have a heart for sustainability. In the past, Tesla established itself as a pioneer in sustainability, producing not only EVs but also solar panels and home battery storage.
Musk cast a shadow on his company’s commitment to sustainability when he aligned himself with the Trump administration, which has been vocal about its desire to roll back the bulk of environmental initiatives introduced by prior administrations. A number of celebrities have recently announced publicly that they have sold their Teslas, citing Musk’s politics as the reason.
To win back customers, Tesla needs to take steps to demonstrate that it still stands for sustainability, as well as reliability and innovation. Consumers, investors, and other stakeholders want to know that Tesla is focused on its mission.
Re-establishing its leadership status
Tesla has long enjoyed valuable leadership status in the EV and sustainability markets, but that status is slipping. Its competition, which involves a number of Chinese EV companies, is gaining ground.
A remarkable product launch would be one way for Tesla to re-establish its leadership status. Immediately following the announcement of its first-quarter 2025 losses, Tesla reported that its plans for new affordable EVs are on track to begin production during the first half of 2025 and that volume production of its Robotaxi vehicles is on target for 2026. The announcement seemed well-received by investors, who initiated a 7+ percent stock price increase. Continuing to keep its progress on those initiatives before the media would be helpful in rebuilding trust.
Reconsidering corporate governance
There is no denying Musk has played the leading role in driving Tesla to the top of the EV market. But there is also no denying that his focus has shifted.
As Tesla stock has slipped over the past five months, Musk remained relatively quiet about the company’s performance and its plans for recovery, while continuing to comment on political issues. Some experts see that as poor corporate governance.
To regain trust, Musk will need to show stakeholders that Tesla is his priority. While Musk has said he is cutting back on his involvement, he also says he continues to spend 1 to 2 days per week working for DOGE for the foreseeable future. Whether or not that will satisfy stakeholders remains to be seen.
Recognizing the need for a new level of leadership
Musk has said he will soon begin shifting his focus back toward Tesla, which is a positive sign for the company. But Tesla may find simply rebooting operations as they stood before Musk’s DOGE involvement may not be sufficient.
The EV market is changing. Competition is growing, and the tax incentives that drove a lot of domestic buying are under threat. The raft of new tariffs the Trump administration has introduced could also negatively affect Tesla.
As Musk returns, he could find that business as usual will not be enough to keep Tesla strong. If simply plugging back in doesn’t result in recovery, Musk will need to show he can lead Tesla back to market dominance in the new reality.
Tesla has leveraged its reputation as a technological innovator and market disruptor to drive its sales in the EV industry to unparalleled heights. But the company is now facing an identity crisis that is impacting its profitability. Recovering will require effective public relations efforts that convince stakeholders that its leadership, vision, and capacity to deliver remain solid.
