U.S. President Donald Trump has stirred controversy by purchasing a Tesla vehicle in a show of support for Elon Musk.
After revealing his purchase, Trump praised Musk as a “patriot” on Tuesday, saying his decision was meant to help Tesla amid stock struggles and boycotts. The endorsement appeared to have an immediate effect, with Tesla’s stock closing higher after a sharp decline the previous day.
However, financial experts warn that a sitting president openly backing a private company could have unintended consequences.
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“Tesla is becoming a political symbol of Trump and DOGE, and that’s bad for the brand,” said Dan Ives, a financial analyst at Wedbush Securities, referencing the Department of Government Efficiency, a cost-cutting advisory group led by Musk. “You think it’s helping, but it’s actually hurting.”
Tesla’s stock saw an early boost Tuesday after Trump posted on Truth Social that Musk was “putting it on the line” for the country. He claimed “Radical Left Lunatics” were colluding to “illegally” boycott Tesla, calling it “one of the world’s great automakers” and Musk’s “baby.”
Hours later, shares climbed even higher as Trump, in a White House event, announced he had personally bought a Tesla.
“I don’t like what’s happening to you,” Trump told Musk before selecting a red Model S, priced at $80,000. Sitting in the driver’s seat, he remarked, “Wow. That’s beautiful.”
The stock ended the day up nearly 4%, recovering some losses after Tesla had suffered one of its worst single-day sell-offs in history.
Despite the stock bump, Tesla continues to struggle in 2025. The company faces mounting competition from Chinese EV makers and backlash over Musk’s political ties. Protests have erupted at Tesla showrooms, and some Tesla owners, hoping to avoid being targeted, have added bumper stickers reading, “I bought it before Elon went nuts.”
According to a report, shares have plunged 45% this year, and on Monday alone, Tesla stock fell more than 15% to $222.15—its lowest since October. The decline reflects growing pessimism as sales plummet worldwide.
Musk’s strong backing of Trump has also raised concerns among investors. He donated $270 million to Trump’s 2024 campaign and celebrated his election victory over Democratic candidate Kamala Harris. Tesla shares initially soared to $479 per share by mid-December but have since tumbled to around $230.
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Tesla’s declining stock price could create two major problems for the company.
First, many Tesla employees receive stock purchase options at a discount as part of their compensation. With share prices plummeting, some workers now hold options priced higher than the current stock value, making them effectively worthless.
Second, the drop could hinder Tesla’s ability to raise funds through new stock sales. In 2020, Tesla raised $12 billion by issuing shares, which helped fund expansions in Berlin and Texas. A lower stock price means future fundraising efforts could generate significantly less capital, though weak sales may delay expansion plans altogether.
Musk’s deep involvement in Trump’s administration has raised concerns that he is too distracted from running Tesla. As head of DOGE—the Department of Government Efficiency—Musk has spearheaded efforts to slash federal spending and lay off government workers, diverting his focus from Tesla’s business.
Meanwhile, his other ventures are also facing turmoil.
His social media platform, X, suffered multiple crashes Monday, which Elon Musk blamed on a “massive” cyberattack. However, tech experts warn the outages are linked to Musk’s drastic staff cuts at the company.
SpaceX also experienced a major setback last week when a rocket exploded over Florida, marking its second failed launch in two months.
With Tesla struggling and Musk increasingly preoccupied with politics, investors worry whether he can still steer the EV giant back on track.
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