March 2025 Insights

Turbulent Tesla

After surging in the aftermath of Donald Trump’s re-election, Tesla shares have since dropped more than 40% from its December 2024 highs. The electric vehicle (EV) giant is facing a swathe of challenges, including global competition, scrutiny over its leadership, and intensifying political and cultural backlash. In Europe, Tesla shipments for February fell 40% y/y despite overall EV sales in the region increasing 26%. Rising competition from a suite of newer (and cheaper) Chinese offerings is starting to ramp up the pressure. BYD, for example, sold 4.3 million EVs and hybrids in 2024—surpassing Tesla’s revenue for the first time in seven years. They also announced a revolutionary battery charging technology, which allows their newer cars to add about 400km range in just 5 minutes. For comparison, Tesla superchargers add around 275km in 15 minutes. BYD’s share price has risen 42% so far this year on the back of these announcements, a stark contrast to its US competitor.

Source: High Street via Google Gemini

However, Tesla’s challenges run deeper than declining vehicle shipments. A more complex issue is the effect of Elon Musk on the Tesla brand. His appointment as head of the newly formed Department of Government Efficiency (DOGE) has sparked renewed scrutiny about his expanding and highly public portfolio of interests. Beyond DOGE and Tesla, Musk is deeply involved in several other ventures including X (formerly Twitter), Neuralink, and SpaceX. His close proximity to the Trump administration has also spawned a wave of social and cultural opposition. In just the past week, Molotov cocktails and gunfire were used to destroy several Tesla vehicles in Las Vegas, while four cars were set ablaze in Berlin.

As public criticism mounts and Musk’s attention is increasingly divided across multiple ventures, investor concerns about his ability to remain fully committed to Tesla have grown. Betting markets reflect this sentiment, with Polymarket indicating an 18% chance that Musk will be ousted as CEO of Tesla in 2025. Despite Musk’s indisputable business acumen, High Street has not invested in Tesla in any of our offerings. Although visionary leadership helped build Tesla into the world’s most valuable automaker, we believe a long-term investment requires management that is focused, undistracted, and fully aligned with shareholder interests.