In a stunning reversal of fortunes, Tesla Inc. just had one of the worst quarters in its 15-year history on the stock market, losing more than 36% of its value and wiping out $460 billion in market capitalization.

The electric vehicle (EV) giant, long seen as a beacon of innovation and investor optimism, now finds itself at the center of a financial and political storm — largely of its own making.

The first quarter of 2025 marked Tesla’s third-ever quarterly decline, with only the final quarter of 2022 being more disastrous, as shares plunged 54% amid then-CEO Elon Musk’s chaotic $44 billion acquisition of Twitter (now X).

At the time, Musk sold more than $22 billion in Tesla stock to fund the deal, causing panic among investors. Now, history appears to be repeating itself — albeit in a different form.

While Tesla’s sales in Europe and China are down and increased competition in the electric vehicle space has certainly contributed to the downturn, analysts say the company’s most pressing problem may not be cars — but politics.

Much of Q1 coincided with Musk’s newly appointed role as head of the Department of Government Efficiency, or DOGE — a federal initiative launched by the second Trump administration with a mandate to cut government spending and eliminate bureaucracy.

As of the end of March, the DOGE program claimed to have cut federal spending by $140 billion.

Still, that’s a fraction of the $460 billion investors just saw wiped off Tesla’s market value — a figure more than three times the savings DOGE is said to have saved.

The irony has not been lost on Musk. “My Tesla stock and the stock of everyone who owns Tesla has dropped by almost half,” he admitted at a rally in Green Bay, Wisconsin, on Sunday.

Ostensibly to support a conservative candidate for the state Supreme Court, Musk instead found himself defending the economic consequences of his political side hustle.

“This is a very expensive business is what I’m saying,” he told the crowd. For shareholders, Musk’s growing involvement in national politics and policy has become a flashpoint in controversy.

Once hailed as a visionary CEO who could run multiple companies across multiple sectors, Musk is now seen by some institutional investors as a liability.

“Tesla investors did not sign up to participate in a political movement in practice,” said Karen Holtzman, a senior analyst at Trident Capital. “Musk is an ongoing conflict of interest. You can’t lead a public company and run a government agency while lobbying on behalf of partisan judges and cutting the federal workforce.” Public confidence in Musk’s leadership appears to be waning. According to data from car-buying site Edmunds, Tesla trade-ins for other vehicles — both new and used — have hit record highs since Musk began his tenure at DOGE.

Adding to the uncertainty are growing reports of vandalism against Tesla vehicles, incidents that some see as a backlash to Musk’s increasingly politicized image. Social media posts and viral videos have shown Teslas being keyed, vandalized, or otherwise targeted, feeding the perception that owning a Tesla is no longer just a consumer choice but a political statement. While Musk’s political shift may be grabbing headlines, Tesla’s core business is also under siege. Once the undisputed leader in electric vehicles, Tesla is now struggling to keep up with global competitors.

Nowhere is this more evident than in China, where domestic giant BYD continues to widen the gap. In Q1 2024, BYD accounted for 32% of new electric vehicle sales in the Chinese market. Tesla? Just over 6%. There are several reasons. BYD has made significant strides in fast-charging technology and vehicle affordability, key weaknesses that continue to plague Tesla’s products.

In Europe, similar trends are emerging as established automakers and nimble startups flood the electric vehicle market with alternatives that are often better suited to regional needs.