Elon Musk’s Reckless Power Grab Is Backfiring—And Tesla Is Paying The Price
Musk took a chainsaw to the federal government & embraced the far-right. Now, it's backfiring as DOGE's power gets limited & Tesla—the core of his net worth—is seeing sales slump and shares decline.
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Last month, Elon Musk was behaving like a man on top of the world, convinced of his own invincibility.
"This is the chainsaw for bureaucracy!” Musk yelled as he swung a literal chainsaw over his head to cheers from the CPAC crowd. Watching that footage, I thought: this is a man flying too close to the sun.
Now, just weeks later, we’re watching Icarus’s wings melt as the sparks from Musk’s reckless chainsaw cuts to the federal government are flying back at him, scorching his most important company in the process.
Last week, Elon Musk attended a meeting of angry Trump Cabinet officials that resulted in President Trump claiming to limit Musk’s ability to unilaterally make cuts. This showed the administration responding to public pressure and poor poll numbers.
Elon Musk’s embrace of the far-right and unhinged approach to gutting the federal government is also causing widespread damage to his business empire.
On Monday, Tesla’s stock dropped by 15%, the largest single-day loss since September, amid steep declines in sales worldwide. This marked a 50% decline in Tesla stock in less than 3 months. The decline wasn’t happening in a vacuum. Tesla vehicles have been vandalized, and Tesla dealerships have seen protests across the country as the public backlash to Elon Musk’s power grab has grown
To top all this off, in an interview with Larry Kudlow on Fox Business, Musk appeared subdued as he reckoned with the damage he’s done to his own businesses.
Let’s dive into the details.
After nearly two months of Elon Musk and his Department of Government Efficiency (DOGE) carelessly dismantling agencies and cutting federal funding, we’re beginning to see the first indications that the vast influence of DOGE could be waning and that the backlash to their moves is having an impact.
Last Friday, The New York Times reported on a volatile meeting where the tensions between Elon Musk and Trump’s Cabinet culminated in an explosion of anger. The meeting occurred last Thursday and resulted in a consequential limiting of Elon Musk’s power. From The Times:
You have fired “nobody,” Mr. Musk told Mr. Rubio, then scornfully added that perhaps the only person he had fired was a staff member from Mr. Musk’s Department of Government Efficiency.
Mr. Rubio had been privately furious with Mr. Musk for weeks, ever since his team effectively shuttered an entire agency that was supposedly under Mr. Rubio’s control: the United States Agency for International Development. But, in the extraordinary cabinet meeting on Thursday in front of President Trump and around 20 others — details of which have not been reported before — Mr. Rubio got his grievances off his chest.
The report goes on to showcase Musk continuing to berate Secretary Rubio until Trump jumps in to defend him. It also showcased Transportation Secretary Sean Duffy confronting Musk about DOGE trying to fire air traffic controllers, a move Duffy claims he prevented. The Times reports that Trump stepped in and declared, “From now on, he said, the secretaries would be in charge; the Musk team would only advise.”
After the meeting, President Trump took to Truth Social and publicly announced this change, indicating that Cabinet Secretaries would be making decisions about who gets fired, and he appeared to frame DOGE in more of an advisory role:
I have instructed the Secretaries and Leadership to work with DOGE on Cost Cutting measures and Staffing. As the Secretaries learn about, and understand, the people working for the various Departments, they can be very precise as to who will remain, and who will go. We say the “scalpel” rather than the “hatchet.”
This shows that the Trump Administration is responding to public pressure, which includes town halls and plummeting poll numbers for President Trump and Elon Musk.
Of course, actions speak louder than words. We’ll see exactly how much Elon Musk’s power within the Administration is limited. But on top of Trump’s directive, the courts are doing some limiting of their own.
The Trump Administration and DOGE’s moves, in particular, have been taking on an avalanche of legal losses.
The biggest legal setback for the Trump Administration and DOGE’s effort to gut the federal government this week came in two rulings on Thursday. After a federal judge earlier in the day ordered the rehiring of tens of thousands of probationary employees at six federal agencies, U.S. District Judge James Bredar issued a Thursday night ruling that expanded that to 18 federal agencies.
Politico reported, “Both judges concluded that the Trump administration used false allegations of 'performance' issues as a pretext to justify the large-scale firings and ignore legally mandated procedures for slimming the workforce.”
This ruling could force the reinstatement of up to 200,000 probationary employees that were let go in DOGE-ordered mass firings.
This week, there have also been multiple rulings forcing more transparency from DOGE. US District Judge Tanya Chutkan ordered DOGE to turn over records and reveal the identities of its staffers. The ruling came after 14 Democratic Attorneys General sued, accusing Elon Musk of unconstitutional abuses of power. This came after another federal judge ruled that DOGE is likely subject to Freedom of Information Act requests.
The limiting of DOGE’s powers is just the beginning of Musk’s problems. Musk’s actions within the Trump Administration are causing sales and the stock price to tank at the company that comprises most of his net worth.
The growing backlash over DOGE’s blunt-force approach to government and Elon Musk’s support for the far-right has sparked vandalism and protests at Tesla dealerships. But perhaps more consequentially, we’ve seen a sales slump.
Around the world, Tesla sales are seeing steep declines. TIME Magazine reported on this in more detail. In a nutshell, Tesla has sold half of the number of vehicles in Europe in January than it did in the previous January. In Germany, Tesla sales are down 70% year-over-year. Between January and February, there was a 53% drop in Tesla sales in Portugal, a 45% drop in France, a 55% drop in Italy, a 42% drop in Sweden, and a 48% drop in Norway and Denmark. Outside of Europe, in Australia, for example, there was a 70% year-over-year decline in Tesla sales.
Those declines come in spite of the fact that electric vehicle sales overall are on the rise.
Money talks, and Tesla’s stock has been feeling the heat.
On Monday, Elon Musk had a bad day. So bad that Forbes released an article headlined “A Timeline Of Elon Musk’s Terrible 24 Hours.” Tesla had its largest single-day decline since before the election. From Forbes:
Tesla, the primary source of Musk’s wealth, ends Monday trading down more than 15%, its worst daily loss since September, as the electric vehicle maker became the most notable loser of the Wall Street losses tied to shaky investor sentiment amid President Donald Trump’s tariffs—Tesla stock closed more than 10% lower than it did prior to Trump’s election, wiping out what was once a more than 90% rally, and shares declined over 50% in less than three months.
After this decline, JP Morgan slashed its Tesla Q1 sales estimates and cut its target stock price. From CNBC’s Carl Quintanilla:
“JPMORGAN slashes $TSLA Q1 delivery estimates “to just ~355K, which is -8% y/y .. and -28% q/q from 495K in 4Q24 ..
“.. We struggle to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly ..”
Cuts target price to $120 (prior $135).
As Tesla’s stock tanked, Elon Musk didn’t appear on CNBC, which a less partisan CEO would have done. Instead, he went on Fox Business with Larry Kudlow for a softball interview. Even in that format, Musk struggled.
When Kudlow asked, "How are you running your other businesses?"
“With great difficulty,” Musk answered before letting out a deep sigh and looking emotional.
I wonder if Musk has the capacity to reckon with the “great difficulty” he’s inflicted on thousands of federal workers or the financial volatility the administration he supports is inflicting on millions of Americans with their tariffs.
In any case, Musk has what everyday Americans don’t have: another billionaire buddy to try and help him out.
On Tuesday, the day after Tesla’s massive stock dip, President Trump hosted what was essentially a Tesla infomercial at the White House.
Ironically, further brand association between Tesla and the White House will likely only further diminish its sales.
After this, did Elon Musk change his behavior and act more responsibly? Nope.
On Thursday, Musk reposted a tweet that was simply unbelievable. Forbes reported:
Musk, who has over 219 million followers on X, formerly known as Twitter, retweeted a post saying Soviet revolutionary Joseph Stalin, former Chinese Communist Party chairman Mao Zedong and Hitler—whose regime under his direction orchestrated the Holocaust—did not murder millions of people, “Their public sector workers did.”
It appears Elon Musk’s self-sabotage spiral will continue. The question is, how long will this last, and how much of the country will he sabotage in the process?
Goodness, Ahmed, you’ve brought me some stuff I had missed. And I’ve been glued to the political machinations all week. But the business stuff is fascinating. Thank you for keeping up with it all.