In a stunning reversal of fortunes, Tesla Inc. just suffered one of the worst quarters in its 15-year history on the public markets, shedding more than 36% of its value and wiping out a $460 billion market capitalization. The electric vehicle (EV) giant, long considered a bellwether of innovation and investor optimism, now finds itself at the center of a financial and political firestorm—one largely of its own making.

The first quarter of 2025 marks Tesla’s worst quarterly decline ever, with only the final quarter of 2022 being more disastrous, when 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 shares to finance the deal, triggering panic among investors. Now, history appears to be repeating itself—albeit in a different guise.

While Tesla’s declining sales in Europe and China and stiffening EV competition have certainly contributed to the downturn, analysts say the company’s most pressing problem may not be automobiles—it’s political.

Much of the first quarter coincided with Musk’s newly minted role as head of the Department of Government Efficiency, or DOGE—a federal initiative born out of the second Trump administration with a mandate to cut government spending and eliminate red tape. At the end of March, the DOGE program claimed to reduce federal spending by $140 billion.

However, that figure is dwarfed by the $460 billion investors just evaporated from Tesla’s market value—a figure more than three times larger than Great Dane’s alleged savings.

The irony has not gone unnoticed.

“My Tesla stock, and the stock of everyone Tesla owns, has roughly been cut in half,” Musk admitted during a Sunday rally in Green Bay, Wisconsin. Ostensibly there to support a conservative candidate for the state Supreme Court, Musk instead defended the economic failure of his political moonlighting.

“This is a very expensive job, I say,” he told the crowd.

For shareholders, Musk’s increasing involvement in national politics and policy has become a flash point for controversy. Once a visionary CEO juggling multiple companies across sectors, Musk is now viewed by some institutional investors as a liability.

“Tesla investors didn’t sign up to be part of a de facto political movement,” said Karen Holtzman, senior analyst at Trident Capital. “Musk has a conflict of interest. You can’t run a public company and a government department while campaigning on behalf of partisan judges and making federal staff decisions.”

Public confidence in Musk’s leadership appears to be waning. According to car-buying site Edmunds, Tesla’s other vehicle prices—both new and used—have reached record highs since Musk began his tenure at DOGE.

Adding to the uncertainty are rising reports of vandalism against Tesla vehicles, incidents that some attribute to Musk’s increasingly politicized image. Social media posts and viral videos have shown Tesla cars being tagged, untagged, or otherwise attacked, feeding the perception that owning a Tesla is no longer just a consumer choice, but a political statement.

While Musk’s political pivot may be stealing headlines, Tesla’s core business is also under siege.

Tesla, once the undisputed leader in the EV space, is now struggling to keep pace with global competitors. Nowhere is this more evident than in China, where homegrown titan BYD continues to widen the gap. In the first quarter of 2024, BYD accounted for 32% of new EV sales in the Chinese market. Tesla? Just over 6%.

The reasons are varied. BYD has made significant strides in fast-charging technology and vehicle affordability, key pain points that continue to plague Tesla’s offerings. Similar trends are emerging in Europe, as legacy automakers and nimble startups alike flood the EV market with alternatives that are often better suited to regional needs.

Tesla, meanwhile, has suffered a decline in its major international markets throughout the year, leaving many to wonder if the company’s growth narrative has hit a wall.

Tesla’s critics argue that the company’s problems are due to more than just market pressure and political distractions—it’s a question of leadership.

“Musk has effectively abdicated his role as CEO of Tesla,” said Jeremy Linwood, a corporate governance expert at the Wharton School of the University of Pennsylvania. “He’s spent more time with X, Doge, and political rallies than he has in Palo Alto or Shanghai. This sends a dangerous signal to investors: Who’s steering the ship?”

While Musk remains the public face of Tesla, some insiders say day-to-day operations are more likely to be managed by an increasingly decentralized leadership team. Still, without Musk’s active leadership, Tesla risks losing the visionary edge that helped it dominate a once-arbitrary industry.

Despite the commotion, not everyone is ready to write off Tesla.

“Every major tech company has faced turbulence,” said Mark Coulson, a veteran tech investor. “Apple had its downturn. Amazon weathered its storms. The question is whether Tesla can realign its mission and leadership, or if this is the beginning of a long decline.”

Coulson notes that while Tesla’s valuation has been slashed, it still offers industry-leading margins, a massive Supercharger network, and a strong foothold in U.S. markets. However, regaining investor confidence will likely require Musk to reassess his priorities.

“You can’t run a trillion-dollar company part-time,” he said bluntly.

Tesla’s Q1 collapse may ultimately serve as a cautionary tale about the dangers of CEO overreach and the consequences of blurring the lines of business with politics. For years, Musk has defied conventional wisdom and built a reputation as an untouchable disruptor. But Wall Street has its limits.

And at least these limits seem to have been reached.

As we enter the second quarter, all eyes are on Musk—not just as an entrepreneur, but as a public figure whose decisions have real financial, political, and social consequences.

Whether Tesla can bounce back—or if this is the beginning of a broader unraveling—depends not only on its products, but on the man behind the wheel.