Beyond the boycott

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It’s a weird time to be Tesla — or its competitors.

The company’s CEO, already the richest man in the world, is now one of the most powerful, amassing influence in the federal government so expansive even the administration’s lawyers seem unsure where it ends. It’s a perch other major CEOs could only dream of (partly because, until two months ago, it would have been considered legally and ethically unthinkable).

At the same time, his company’s business outlook is facing a growing number of threats: Boycotts and backlash have driven down Tesla’s sales projections and protests have spread across the country. Its stock has lost nearly 40% of its stock value since an all-time peak in December. Most of all, after years of benefitting from government loans and subsidies, the company faces an industry-wide threat: a looming congressional fight over clean energy subsidies that could undercut the still-nascent electric vehicle market.

About a fifth of U.S. carbon emissions come from personal vehicles and cars, making the sector a prime focus for environmentalists in recent years. Joe Biden’s presidency in particular coincided with sizable expansion for the EV industry: The share of new cars sold in the U.S. that are fully electric rose from 2% in 2020 to over 8% in 2024. The growth was attributable to both organic movement in the auto industry and the passage of big federal infrastructure and climate legislation — most notably the 2022 Inflation Reduction Act, the largest climate investment in U.S. (and by some measures, world) history.

All the while, Musk’s company has dominated the field: Even as Tesla’s market share eroded the past few years, about half of all new EVs in the U.S. in 2024 were made by the company. Just a few years ago, the brand’s supremacy might have been enough to create an awkward tension for the Democratic Party, which frames both climate change and Musk’s slash-and-burn power grabs as existential threats to the country’s way of life. But with the EV industry experiencing steady growth in Europe, China, and the U.S., there are enough options that consumers angry with Musk can now comfortably pick other manufacturers — and many seem to be taking the opportunity to do so.

Unlike other ill-fated campaigns (February’s “economic blackout” never seemed to escape Instagram) the Tesla backlash can no longer be dismissed as mere liberal teeth-gnashing. In Europe, where Trump is deeply unpopular and Musk’s forays into far-right politics are even more controversial, Tesla sales have dropped nearly 50% year-over-year, even as EV sales overall continue to climb. One poll in Germany, where Musk publicly endorsed the far-right AfD party ahead of last month’s elections, found more than 90% of respondents now unwilling to buy one of the company’s cars. And while Republicans have largely focused on incidents of vandalism and violence, peaceful market trends are more alarming for Musk: One analysis this week found consumers are trading in their Teslas at record levels, and another found both demand and prices for used models dropping rapidly.

The backlash has even reached Capitol Hill, where some congressional Democrats have announced in recent weeks that they themselves are ditching their rides. In a statement, California Rep. Sydney Kamlager-Dove confirmed she was one of them — and called on other Americans to join her. “I fully support the peaceful Tesla boycott movement — my family got rid of one of our Teslas and we’re in the process of selling the other,” Kamlager-Dove said. “Tesla is not the only EV game in town and democracy is not for sale.”

Liberal environmental groups were hesitant to outright endorse the boycotts, but they clearly took some satisfaction in the Tesla backlash, informed by the irony that the CEO of the country’s top EV provider is part of an administration rolling back environmental protections. “It’s no surprise that public anger at Elon Musk is growing,” said Katherine Garcia, the director of the Clean Transportation for All campaign at the Sierra Club, who argued Musk’s legacy as an electric leader has largely been undone. “Musk’s accomplishments as an innovator on electric vehicles are undermined by his alarming decision to align himself with climate deniers and sow chaos and discord in our country for his own financial gain.”

Sunrise Movement, a combative left-wing environmental group, came the closest to a clear endorsement. “I think it’s clear from Elon Musk’s reaction in the last couple of weeks that this is striking a nerve, and it is leveling a cost on him when few other things have,” said Stevie O’Hanlon, the political director for Sunrise.

On the other end of the spectrum, some conservatives see hypocrisy. “Progressive climate activists’ strict litmus tests and unwillingness to work with anyone on the right is actually sabotaging their goals to deploy clean energy and innovative technologies,” said Chris Barnard, president of the American Conservation Coalition, a conservative environmental group. “The protests against Tesla are just the latest in a long history of virtue-signaling from extremist climate activists.”

But the damage that liberals could do to Tesla’s bottom line is only one piece of the picture. In the months ahead, conservatives on Capitol Hill may strike their own blow, as congressional Republicans debate whether, and how much, to pare back the Inflation Reduction Act. The law has swelled in impact in recent years, with multiple analyses showing its cost exploding far past original projections due to the popularity of its tax credits. That has dissolved the goal set by one of its chief backers, former Sen. Joe Manchin, to reduce the deficit, but has supercharged the law’s potential to reduce emissions. It’s also drawn more Republicans to the idea of making changes to the law, partly to finance their own planned tax cuts this year.

The likelihood of IRA cuts is an open question. While some Republican leaders seem dead set on clawing back provisions, rank-and-file members have signaled some resistance. This month, two dozen House Republicans, many hailing from areas already reaping the benefits of IRA investments, signed a letter of support for preserving core provisions. Where they ultimately land could have a big impact on the entire EV industry — including Tesla, which benefits enough from the law to advertise IRA credits on its site. And while the law’s provisions and impacts are deeply complex (by making EVs more affordable overall, it has arguably helped Tesla sell more cars but also helped erode its market dominance), analysts still say a repeal would hurt Musk’s company.

Robbie Orvis, a Senior Director of Modeling and Analysis at Energy Innovation Policy & Technology, a non-partisan think tank, says Tesla has “absolutely” reaped rewards from the IRA. “It’s been beneficial for them,” said Orvis, who recently co-authored a report outlining the economic cost of an IRA repeal. “They probably have a higher share of their vehicles qualifying [for tax credits] than a lot of the other automakers.”

For now, it’s clear that Tesla is experiencing real pain. But the uncertainty around the long-term trajectory of the EV industry is likely to continue for as long as the GOP debates its plans for the IRA. “The private sector wants certainty above all else,” said Orvis. “It seems like every week there’s a pull in both directions, and it’s really hard to know, at the end of the day, where things are going to settle out.”

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