Tesla Crashes & So Does Musk in DC

February sales still weak; More price cuts; & Trump cuts Musk's power at DOGE

Musk Slowly Becomes “Persona Non Grata” in DC

• Tesla dropped by 5.6% yesterday as the Nasdaq 100 fell by 2.8% and closed below its 200-day moving average for the first time in almost 2 years.

• Tesla already broke down below its 200-day moving average (see Figure 1 below) but fell harder than any other auto stocks yesterday on yet another month of double-digit sales declines in February.

• Figure 2 lists up Tesla’s February sales in all the reporting countries outside of North America (which make up 60% of quarterly deliveries). Overall, February’s declines in Europe were still bad but Asia’s decline was much milder than January due to Chinese New Year falling in January this year (February last year), a rebound in Korea and Taiwan, and a burst of deliveries in Turkey.

• Tesla’s Q1 will be worse than expected because, on top of sales likely dropping by over 10% YoY, huge incentives being offered in North America for the refreshed Model 3 (0% & $0 down financing deals) and for the Cybertruck in the US (1.99% loans) could lead to losses.

• More significantly, Musk was called into Congress yesterday to meet with congressional Republicans regarding his role and tactics at DOGE. Trump then held a Cabinet meeting where he essentially declared limits to Musk’s powers at the “Department of Government Efficiency” (DOGE).

• The “political huddling around Elon” around noon yesterday was far more concerning than February’s bad sales numbers. It’s a sign that my doubts about Musk’s compatibility with Washington DC’s elite were well-justified: top lawmakers and Cabinet members don’t like Musk and asked Trump to rein in his powers.

• I don’t see this as a sign of Musk’s head being on the White House chopping block, but I do think that his “hatability” could gather enough steam in DC to pressure Trump into getting rid of Musk.

• After Trump won the election, Tesla rose by 95% in just 6 weeks, but despite its huge underperformance of the Nasdaq 100 this year (Tesla is down 34.8% YTD versus the Nasdaq 100’s decline of 4.6%), Tesla is still 4.8% above its $251 closing price on the day before Trump won. The Nasdaq 100 is 0.9% below its pre-Trump victory level.