Tesla has experienced a significant decline in its market capitalization, losing approximately $800 billion since December 2024. This downturn has prompted prominent investors to express concerns about CEO Elon Musk’s leadership and his involvement in external ventures, including his role in the U.S. government. One notable investor, Ross Gerber, has publicly called for Musk to step down as CEO unless he refocuses on Tesla.
Market Capitalization Decline
As of December 2024, Tesla’s market capitalization stood at approximately $1.5 trillion. By March 2025, it had fallen to around $700 billion, marking a loss of nearly 50% in value. This decline is unprecedented in the automotive industry, with JPMorgan analysts stating they “struggle to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly.”
Investor Concerns
Ross Gerber, a long-time Tesla investor, has voiced concerns regarding Musk’s leadership, particularly his involvement with the Trump administration’s Department of Government Efficiency (DOGE). Gerber argues that Musk’s political engagement has become a distraction, stating, “I think Tesla needs a new CEO… the company’s reputation has just been destroyed by Elon Musk.”
He emphasizes that Musk’s divisive political stance has negatively impacted Tesla’s brand and sales, leading to a crisis within the company.
Analyst Perspectives
Dan Ives, an analyst at Wedbush Securities known for his optimistic view on Tesla, describes the current situation as a “crisis” primarily due to Musk’s focus on the DOGE initiative and his advisory role in the Trump administration. Ives suggests that Musk must clarify how he will manage his roles at Tesla and the DOGE office and provide explicit details and timelines for Tesla’s upcoming lower-cost vehicles and the Full-Self Driving (FSD) rollout to resolve the crisis.
Impact on Sales and Competition
Tesla’s challenges are compounded by intensified competition in China, declining global sales, and a damaged reputation due to Musk being perceived as distracted. Rivals like Polestar are capitalizing on the turmoil by offering incentives to Tesla owners to switch brands.
Retail Investor Activity
Despite the downturn, retail investors have been buying Tesla stock heavily. JPMorgan’s “Retail Radar” report indicates that retail traders bought $12.5 billion worth of assets in the past week, with $3.2 billion directed into Tesla. This consistent investment over the last 12 days represents the highest value influx into Tesla for any such streak in over a decade.
Conclusion
Tesla’s significant market capitalization decline has raised concerns among investors about Elon Musk’s leadership and external commitments. Calls for Musk to step down or refocus on Tesla highlight the urgency of addressing these challenges to restore investor confidence and stabilize the company’s market position.
