While Elon Musk's political influence continues to grow, his business empire is witnessing headwinds.
As Tesla prepares for its India debut, the global electric vehicle giant is facing speed bumps in many countries amid plummeting sales and a growing backlash against its CEO Elon Musk due to his political views and actions.
The Tesla stock has also been on a downtrend, as investors worry about Musk's divided attention between his role as the head of multiple ventures and a key advisor to US President Donald Trump.
While Musk's political influence continues to grow, his business empire is witnessing headwinds.
In such times, the India entry could be a big opportunity for the US carmaker.
Tesla has leased a 4,000 square feet showroom space in Mumbai's Bandra Kurla Complex, India's costliest commercial hub, for Rs 23.38 crore (Rs 233.8 million) for five years.
In the past, Tesla and Musk's other ventures benefited from the enthusiasm surrounding Trump's re-election, but recent market trends suggest that Musk's increasing political involvement may now be having unintended consequences.
After initially surging following Trump's win in November, Tesla shares have corrected sharply, falling about 25 per cent in the past month, 12 per cent over three months, and 28 per cent year-to-date.
Although the stock remains up 40 per cent over the past year, the recent slump has pushed Tesla's market capitalisation below the $1 trillion mark.
Trouble for Tesla began early last year, when sales took a hit amid supply chain disruptions.
The company reported first-quarter 2024 deliveries of just under 387,000 vehicles, its lowest in over a year.
Production was impacted by multiple setbacks, including Houthi attacks in the Red Sea, which temporarily shut down Tesla's Germany factory.
The plant was later targeted in an alleged arson attack, further disrupting operations.
One of the biggest setbacks came from China, where Tesla's 'Navigate on City Streets' feature has faced criticism for failing to meet expectations.
Reports indicate that Tesla plans to roll out a software update to improve its Autopilot functionality in China, bringing it closer to the Full Self-Driving (FSD) capabilities available in the US.
However, concerns over Tesla's regulatory challenges in China remain high, especially as the US shifts from a 'China plus one' strategy to an 'Anything but China' approach, discouraging reliance on Chinese firms.
Tesla's struggles have further been exacerbated by global trade tensions.
The Trump administration's decision to impose a 25 per cent tariff on Canadian and Mexican goods and an additional 10 per cent levy on Chinese imports has triggered retaliatory measures.
Canadian officials have suggested a 100 per cent tariff on Tesla vehicles, and Ontario Premier Doug Ford terminated a contract with Musk's satellite company Starlink.
Critics also argue that Tesla's product lineup has stagnated compared to new offerings from competitors.
Tesla faces stiff competition from traditional automakers expanding into electric vehicles and newer EV-exclusive companies.
Key players include BYD, General Motors, Ford, Volkswagen, Rivian, Lucid Motors and NIO.
Musk reportedly invested $250 million to support Trump's re-election campaign and later led a cost-cutting initiative within the government called the Department of Government Efficiency (DOGE).
While Musk's appointment as a special government employee under Trump has granted him considerable influence over federal operations, concerns are growing about the potential conflicts of interest, particularly in sectors where federal contracts and regulations are key to business success.
Feature Presentation: Ashish Narsale/Rediff.com
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