Tesla's Slide: Ross Gerber Warns Musk's Political Stakes and Brand Crisis Are Sinking the Stock

The Tesla story has taken a dark turn in 2025, and Ross Gerber—the CEO of Gerber Kawasaki—argues that Elon Musk’s leadership and political entanglements are the root causes. Gerber, a long-time Tesla shareholder who reduced his stake by 31% last year, paints a grim picture of a company now struggling with declining sales, brand erosion, and a stock price in freefall.

Tesla’s Stock Collapse and the Demand Drought

Tesla’s shares have plummeted 33–37% year-to-date in 2025, with a peak-to-trough drop of 48% since mid-2024. The decline isn’t just about valuation—it’s tied to a sharp slowdown in vehicle demand. Deliveries fell 13% year-over-year in Q1 2025, and European sales dropped a staggering 49% in early 2025. Gerber attributes this to a “brand and execution crisis,” exacerbated by Musk’s high-profile political moves.

The Political Cost: Musk’s Trump Ties and Consumer Backlash

Gerber’s central critique is that Musk’s alignment with Donald Trump’s administration—and his role in the Department of Government Efficiency (DOGE)—has turned Tesla into a politically charged brand. Initially, investors believed Trump’s policies would boost Tesla, but Gerber calls this a “not good at all” miscalculation. Musk’s controversial gestures—such as a salute likened to a Nazi symbol—and his defense of Trump’s policies have fueled boycotts, vandalism of Tesla vehicles, and a broader consumer exodus.

The fallout extends beyond optics. Gerber argues that Musk’s focus on non-Tesla ventures—SpaceX, X, xAI—has distracted him from core operations. “Consumers don’t want to be part of the controversy,” Gerber says. “Buying a Tesla now feels socially risky.”

Earnings, Valuation, and the Moonshot Mirage

Wall Street still expects Tesla to hit $2.75 per share in 2025 earnings, with $3.65 projected for 2026. But Gerber is skeptical. He points to a 71% profit drop in Q1 2025 and warns that Tesla’s reliance on speculative projects—like robo-taxis and humanoid robots—is a “moonshot distraction.” With Tesla trading at a 65x forward P/E ratio—triple the S&P 500’s valuation—Gerber argues the stock is overvalued.

“If Tesla misses earnings targets, the stock could drop to $150 if its P/E contracts to 50x,” Gerber says. At current prices, he sees little margin for error.

The Used Car Problem: Tesla’s Durability Backfires

A hidden crisis is undermining Tesla’s sales: its cars are too good. Gerber compares Tesla to Apple, noting that a five-year-old Model 3 is still as capable as newer models. This has flooded the used market with affordable vehicles, depressing demand for new ones. U.S. EV sales fell 8.6% year-over-year in Q1 2025, even as the broader EV market grew 11.4%.

Musk’s Leadership: A “Delusional” Captain?

Gerber reserves his harshest criticism for Musk’s leadership. During Tesla’s Q1 2025 earnings call, Musk struggled to explain autonomous driving plans, stuttering for 10 minutes—a moment Gerber calls “embarrassing.” He dismisses Musk’s claims about camera-based self-driving tech, arguing it can’t replicate human senses like touch or smell.

“Musk doesn’t care about Tesla anymore,” Gerber says, accusing management of being “in complete denial” about the brand’s reputational damage.

The Bottom Line: Tesla’s Path Forward

Gerber remains a Tesla shareholder but sees little hope for a rebound. To recover, Tesla must revive vehicle sales, hit earnings targets, and repair its brand—none of which seem likely. With political tensions unresolved and Musk’s distractions mounting, Gerber warns that Tesla’s valuation will keep falling unless the CEO refocuses.

Final Take: Tesla’s 2025 struggles—37% stock decline, 13% sales drop, and a 71% profit collapse—are a stark warning. Gerber’s analysis suggests Musk’s political gambles and mismanagement have created a perfect storm. Unless Tesla’s fundamentals turn around, its $150 billion+ valuation may be unsustainable.

In a sector racing ahead, Tesla risks becoming a cautionary tale of overvaluation and leadership missteps.