What a difference just a few months can make.
Elon Musk was riding high in November after his money and influence played a crucial role in Donald Trump’s retaking the White House, and Tesla (TSLA) shares were riding even higher.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰💵
Between November 5 and December 17, 2024, Tesla shares shot up more than 85% to a post-split all-time high above $479 per share.
At the time, Tesla was considered to be in a great position, since Musk was rewarded for his work during the campaign with a high-profile but unofficial role inside President Trump’s cabinet.
Related: Tesla, Elon Musk make drastic decision amid U.S.-China trade war
Musk has indeed had the President’s ear, as his Department of Government Efficiency (DOGE) has controversially been granted wide-ranging powers as the official federal government comptroller.
Despite promises that rooting out fraud and abuse would “easily” save taxpayers $2 trillion, DOGE estimates it will save $150 billion in fiscal 2026.
However, not even Tesla’s stock could be saved from President Trump’s tariff war. While Tesla’s decline began before “Liberation Day,” the 25% tariff on autos and autos parts, along with subsequent retaliatory tariffs from our trade partners, aren’t helping matters.
As a result, the company is also being forced to change its production plans.
The stock is down about 42% from its all-time high, falling 1.75% to $249.75 at last check of early afternoon trading Wednesday.
Tesla sees the Cybercab as the wave of the future.
Image source: van der Wal/Getty Images
Tesla changes plans due to tariffs
Last fall Tesla finally unveiled its vision for a Cybercab future. The electric vehicle maker’s fully autonomous vehicle is supposed to allow owners to make passive income as the managers of automated chauffeur machines.
While the public and private reactions to the event were mixed, the Cybercab debut was a clear vision of what Elon sees the product doing in the future, even if that potential future is many years away.
But news from this week puts even that distant future in doubt.
Tesla’s U.S. production plans for the Cybercab and its oft-rumored Semi electric cargo truck are being disrupted by auto tariffs, Reuters reported.
The company was initially prepared to absorb 34% tariffs levied against China, but the extra costs became untenable as it scaled production.
Since China tariffs currently sit at 145%, the company can no longer source the parts from China that it needs to build the vehicles.
Tesla was supposed to start receiving component shipments in the coming months, and the company has reportedly been sourcing more materials from North America in anticipation of the tariffs.
Still, the haphazard nature of the tariff rollout is causing Tesla and many other companies to change their plans.
Related: Japanese carmaker takes drastic action amid U.S. trade war
Tesla scrambles to makes changes amid tariffs
Tesla has a much stronger foothold in China than it does in Europe.
The company has an 11.47% market share in battery electric vehicles and accounts for 7.48% of China’s new energy vehicle market.
It’s about as strong a foothold as an American car company can have in China.
Sales in 2024 jumped 8.8% in China to a record of 657,000 vehicles delivered. But even here, the company saw some slippage as its market share for battery-only EVs fell from 11.7% to 10.4%.
This is thanks to the dominance of domestic stalwart BYD, which has a 32% share of the country’s new energy vehicle market.
The move comes amid an escalating trade war between the U.S. and China, further complicating Musk’s relationship with the country. As an unofficial member of the Trump Administration’s cabinet, Musk is also a key player in this conflict.
The Gigafactory in Shanghai makes Model 3 and Model Y vehicles for China and also Europe.
More Automotive news:
General Motors delivers surprising business updateFord reports surprising news amid Tesla turmoilApple creates clever way to stop car thieves
China imported 1,553 Model X and 311 Model S vehicles in 2024, so the volume affected by this news is small. However, it is yet another sign that Musk’s political ambitions come with some risks that can and will be felt by Tesla investors.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
