Tesla Was Once a Wall Street Darling — Now Even Its Most Loyal Backers Are Heading for the Exit

For over a decade, Tesla Inc. (TSLA) stood as a symbol of Silicon Valley’s boldest ambitions — disrupting the auto industry, redefining clean energy, and turning its outspoken CEO Elon Musk into a near-mythical figure for investors and tech enthusiasts alike. But now, the very faith that built Tesla’s rise may be starting to unravel.

In a move that has reverberated across Wall Street, Wedbush Securities analyst Dan Ives, one of the company’s most consistent long-term supporters, has slashed his 12-month price target for Tesla by 43%, from $550 to $315. More significantly, he’s signaling what was once unthinkable: that he may walk away from Tesla altogether if current trends continue.

“We’ve been one of Musk and Tesla’s biggest supporters over the past decade,” Ives wrote in a research note to clients on Sunday. “But the current situation is simply unsustainable. The brand of Tesla is suffering by the day as it becomes increasingly politicized.”

Tesla shares opened Monday trading down 6%, at approximately $239.43, following the report and amid broader market volatility triggered by renewed concerns over President Donald Trump’s aggressive trade policies — part of his second-term economic agenda.

Ives’ sharp reversal isn’t just about missed delivery targets or margin compression. At the heart of his concern is what he calls a “Musk-created brand crisis” — a reputational spiral that’s beginning to alienate consumers, investors, and even former allies.

Much of the unease stems from Musk’s increasingly close association with Trump and the Department of Government Efficiency (DOGE) — a newly formed federal task force charged with cutting government waste, which Musk now leads. While Musk insists his involvement is about efficiency and technological modernization, the optics have become far more complex.

“Tesla has essentially become a political symbol globally, and that is a very bad thing for the future of this disruptive tech stalwart,” Ives wrote. “This company once stood for sustainability, innovation, and progress. Now, it’s seen in many international markets as an arm of U.S. political ideology.”

According to Ives’ analysis, Tesla’s politicization has already cost it at least 10% of its global future customer base, with signs of backlash in European and Asian markets. Once considered a luxury brand synonymous with green innovation, Tesla now risks becoming a lightning rod for political division — both domestically and abroad.

Adding to Tesla’s troubles is a renewed wave of economic friction between the U.S. and China. With Trump’s re-election in late 2024, trade tensions have reignited, and new tariffs on imported components — particularly in the automotive and tech sectors — are now in effect.

Tesla, which relies heavily on parts sourced from global suppliers, is directly exposed. These new tariffs are expected to raise costs across its supply chain, squeezing margins at a time when inflation and competition are already biting into profits.

“The timing couldn’t be worse,” Ives stated. “Tesla needs to be investing in growth, cutting prices in key markets, and innovating. Instead, it’s fighting against cost increases and geopolitical headwinds.”

China — Tesla’s most important overseas market — presents perhaps the greatest challenge. Once viewed as Tesla’s growth engine, the country has become an increasingly difficult arena. Domestic automaker BYD, backed by government subsidies and growing national pride, has continued to dominate EV sales, capturing more market share each quarter.

Analysts estimate BYD now leads Tesla in quarterly deliveries in China — a key psychological and economic blow.

Tesla’s first-quarter delivery numbers only amplified Ives’ concerns. The company reported deliveries of 337,000 vehicles, well below analyst expectations. While supply chain disruptions and seasonal weakness were partly to blame, the underperformance was the latest in a string of quarterly disappointments.

Wall Street had already tempered its expectations for Q1, but Tesla still fell short — suggesting deeper, structural issues may be at play. Slowing demand, increased competition, and the impact of Musk’s controversial decisions are now all being scrutinized more closely than ever before.

“Investors used to give Musk the benefit of the doubt — they don’t anymore,” one institutional investor told CNBC. “Every misstep is now a red flag, not a reason for patience.”

What makes this moment especially significant is the identity of the analyst issuing the warning. Dan Ives has long been one of Tesla’s most prominent bulls. He stood by the company during its rocky ramp-up of the Model 3, defended it during the “funding secured” saga in 2018, and championed its long-term vision through pandemic-era volatility.

But this time, Ives isn’t just lowering expectations — he’s questioning the entire strategic direction of the company.

“This is no longer just a company story,” Ives said in an interview with Bloomberg. “It’s a cultural and political story. Musk has entangled Tesla in things that are far beyond cars, software, and batteries — and it’s now hurting the bottom line.”

He added that unless Tesla can “de-politicize its brand and get back to basics,” the long-term growth narrative will remain in jeopardy.

The question now is whether Elon Musk is willing — or even able — to pull Tesla out of this downward spiral. For years, Musk’s brand and Tesla’s brand were essentially one and the same. His boldness, his outspokenness, and his defiance of convention helped elevate Tesla from a niche startup to a trillion-dollar company.

But those same traits are now proving costly.

Musk’s leadership of DOGE — while framed as a civic duty — has been widely criticized as a distraction from Tesla’s mission. His continued presence on politically charged platforms, controversial comments on immigration, education, and social policy, and combative approach to media and regulators are all taking a toll on Tesla’s public image.

Some investors are beginning to wonder if Musk is still the right person to lead Tesla forward — or if the company would benefit from a clearer separation between its operational leadership and its founder’s political persona.

Despite all this, Tesla remains a company with enormous assets — both tangible and intangible. Its advances in autonomous driving, battery technology, energy storage, and AI-driven robotics are still years ahead of many competitors. It retains strong brand recognition, robust infrastructure, and a loyal customer base in many regions.

But the biggest question may no longer be about technology or innovation — it’s about trust.

“Investors can stomach volatility if there’s a clear path forward,” said one portfolio manager at a major hedge fund. “Right now, with Tesla, the path is anything but clear.”

As competition intensifies, both from legacy automakers and EV-native startups, Tesla will need to do more than just build great products. It must also rebuild its public image, clarify its mission, and decide what kind of company it wants to be in a world that’s becoming more politically and economically fragmented.

For now, one thing is clear: the honeymoon is over. And even Tesla’s most faithful believers — like Dan Ives — are beginning to look toward the door.

TSLA Snapshot (as of April 8, 2025):

• Share Price: $239.43 (down 6% on Monday)

• New Wedbush Price Target: $315 (previously $550)

• Q1 Vehicle Deliveries: 337,000 (below expectations)

• Key Headwinds: Brand crisis, political entanglements, tariffs, slowing demand, rising competition

• Analyst Sentiment: Shifting from bullish to cautious — even among longtime supporters