“He’s alienated the wrong people.” That is how marketing professor Scott Galloway characterized Elon Musk’s political shift, as Tesla’s brand image fell from eighth to ninety-fifth in national ratings, based on polling referenced by Galloway on the Pivot podcast. For a business that once represented progressive innovation, the intersection of politics and engineering has precipitated a crisis with few contemporary equivalents.
The statistics make grim reading. Following Musk’s public support of President Trump and his divisive reign at the Department of Government Efficiency (DOGE), Tesla’s share price hit a peak of close to $490 in December 2024 before falling over 50% by April. European sales cratered with drops of 59% in France, 81% in Sweden, and 74% in the Netherlands, as reported by JATO Dynamics and referenced in numerous analyses (Tesla’s sales fall 59% in France, 81% in Sweden). In the United States, the company’s primary demographic green, liberal consumers has turned against it, while Republican support, while growing, remains lukewarm considering that “Three-quarters of Republicans would never consider buying an EV. So he’s cosied up to the people who aren’t interested in EVs,” as Galloway put it.
This polarization is not anecdotal. A Northeastern University study confirmed that Democratic consumers’ brand reputation scores for Tesla flipped ten points negative following Musk’s Trump endorsement, while Republican scores increased eight points. However, Democrats had led Republicans in purchases of Tesla at a 4-to-1 margin, emphasizing the magnitude of the challenge.
Even amidst brand erosion, there exists a stunning phenomenon: retail investors have doubled down on Tesla shares even as institutional owners reduced positions. JPMorgan tallied $7.3 billion worth of net retail inflows across only 12 trading days following the European sales meltdown. “Core investors” have an “undying faith in and love of Elon Musk,” declared Steve Sosnick, chief strategist at Interactive Brokers, in a conversation with Investopedia. For core investors, Tesla’s worth isn’t so much based on today’s sales as the future robotaxis, AI, and self-driving capabilities.
It’s not entirely blind faith. Tesla’s Full Self-Driving (FSD) program, driven by a proprietary neural network architecture, is supported by Dojo, an internally developed AI supercomputer that handles petabytes of video information from millions of vehicles (Dojo is Tesla’s internally developed supercomputer that’s intended to train its “Full Self-Driving” neural networks). The Dojo system utilizes D1 chips each 50 billion transistors and 362 teraflops of compute capability packaged into tiles, racks, and ExaPODs, scaling to 1.1 exaflops per cluster (Each D1 chip has 50 billion transistors and is fabricated with a 7-nanometer semiconductor process, offering 362 teraflops of compute capability). This design is specifically tailored for vision-based autonomy, abandoning the lidar and radar of competitors such as Waymo for a camera-based solution trying to replicate human vision.
The risks are enormous. Tesla’s planned robotaxi pilot in Austin, Texas, will launch with a fleet of only 10–20 cars, remotely supervised by “lots of tele-ops” to maintain safety a far cry from Musk’s previous boasts of autonomous operation without supervision (Tesla announced their Austin Robotaxi pilot will be “Invite Only. Plenty of tele-ops to ensure safety levels – we can’t screw up.”) Remote operators will observe cars via onboard cameras, prepared to intervene or even take the wheel if necessary. This follows the gradual rollout approaches of Waymo and Cruise, which had extensive safety driver testing and remote observation before large-scale deployment.
However, Tesla’s approach differs significantly in terms of transparency and regulatory interaction. While Waymo has made safety cases and peer-reviewed papers available, Tesla has made scant public information available about FSD’s safety performance. The National Highway Traffic Safety Administration (NHTSA) is still seeking answers, particularly in light of the Autopilot and FSD-related crash legacy (NHTSA has been probing these crashes for several years now). Musk’s suggestion that Austin’s test cars need just one intervention per 10,000 miles has raised eyebrows, with independent data indicating a very different intervention rate.
From a business standpoint, robotaxi economics are revolutionary. By eliminating the driver, Tesla projects savings of up to 70% on labor costs, potentially boosting margins from 7% to 12–14% of gross bookings if operational challenges are managed (Tesla’s robotaxis will save 70% on driver costs but will incur new costs, potentially increasing the margin from 7% to 12-14% of gross bookings). Tesla’s access to price insurance based on its own data, and to add both company-owned and customer-owned cars to the network, has the potential to further shake up old ride-hailing and insurance paradigms. The potential to access more than a million cars already out on the road, equipped with FSD, is a scale benefit few competitors have access to.
Nevertheless, the way to scalable, profitable robotaxi services is littered with technical and regulatory obstacles. Remote monitoring is a temporary measure; real autonomy will involve FSD outperforming human drivers by a considerable margin. The business model further rests on low-cost, dependable hardware and having the capability to maintain and clean vehicles economically at scale.
For retail investors, the calculus still centers on faith. “Pretty much all” of Tesla’s market cap is based upon future expectations Sosnick pointed out. Its valuation, with a price-to-earnings ratio north of 140, far outstrips that of traditional automakers or most tech behemoths. Institutional investors might flinch at these multiples, but retail holders are banking that AI-driven autonomy and robotics will make the premium pay.
In the meantime, the brand’s revival hinges not only on technology, but on Musk’s ability to give up the political rostrum. As Wedbush analyst Dan Ives put it, “Still lots of wood to chop for Tesla, but they have their leader back in the pilot seat.” The next act will prove whether Tesla’s engineering genius and AI-driven analytics can surmount the aftershocks of political volatility and whether optimism about the future can survive the demands of the present.
