Tesla is currently dealing with backlash due to its CEO, Elon Musk’s political affiliations, according to a report by Fortune. Longtime investor Cathie Wood suggests that declining Tesla sales might also be linked to broader economic issues. The company is facing difficulties amid various challenges in the auto industry and Musk’s political engagements, which have sparked protests. Despite these challenges, Tesla continues to focus on its future plans, including the introduction of a new, affordable electric vehicle model and advancements in self-driving technology.
Cathie Wood, CEO of Ark Invest, attributes some of Tesla’s recent decline in demand to general economic concerns. She discussed on a March 14 video on Ark Invest’s website that both ongoing political dynamics and economic outlook are impacting demand, not just for Tesla, but for the entire auto industry. Wood noted the difficulty in determining whether political factors or economic conditions are more responsible for affecting Tesla’s sales.
In recent weeks, there have been incidents of vandalism at Tesla dealerships across the United States. At a Tesla showroom in New York City, a peaceful protest escalated, resulting in the arrest of nine individuals. Elsewhere, other individuals have been apprehended for vandalizing Tesla properties.
Tesla’s market share in Europe has decreased, partly due to potential customers who oppose Musk’s political views choosing not to purchase Tesla vehicles. In one of its largest markets, China, Tesla faces substantial competition from local companies. In the U.S., there has been an uptick in Teslas being traded in, possibly a response to the political climate.
The broader auto industry also faces significant challenges. Nissan recently laid off 9,000 workers, and Volkswagen has closed factories in Germany. In the U.S., major companies such as Ford, GM, and Stellantis have experienced setbacks as electric vehicle sales slowed, despite significant investments in diversifying away from gas-powered vehicles. The Trump administration’s tariff policy could further affect the auto industry, particularly companies that rely heavily on imports.
Consumer confidence has declined since the beginning of the year, reaching a year-long low, while major banks have raised concerns about increased risks of a recession.
Despite the challenges facing Tesla and potential economic downturns, Cathie Wood remains optimistic about Tesla’s future. In a recent Bloomberg interview, she predicted that Tesla’s stock could reach $2,600 in five years, a substantial increase from its current share price of $275.93. Tesla and Ark Invest declined to comment to Fortune.
Wood believes that Tesla’s success depends on launching its new, lower-priced model and perfecting its self-driving technology. Tesla has been promoting a more affordable EV, priced around $25,000, which it aims to release in the first half of the year. However, similar plans have been canceled in the past, leading to some skepticism among investors.
Wood’s analysis is based on the idea that if Tesla successfully develops a fully autonomous vehicle, the company would transition into a software business rather than relying solely on vehicle sales. She envisions that Tesla could deploy a fleet of robotaxis from its existing vehicles through a software update, significantly increasing their utility without additional costs.
Currently, Tesla’s self-driving systems are not yet fully autonomous and still require human oversight. However, the company prioritizes developing its autonomous technology. Wood asserts that autonomous taxi networks represent the largest AI project globally, and Musk is concentrating on removing any obstacles that are hindering Tesla’s progress.
The story was originally reported by Fortune.
