Elon Musk Returns To Tesla—But Is It Too Late To Save The Brand?

Elon Musk says he’s coming back to Tesla—but the bigger question is whether it’s too late to undo the damage.

On Tuesday night, Musk told investors he plans to scale back his involvement with the Department of Government Efficiency (DOGE), spending only one or two days a week there starting next month. He said he’ll be using the extra time to refocus on running Tesla.

But even if Musk devotes himself fully to the now struggling company, the fallout from his political entanglements and controversial leadership at DOGE may have already done lasting harm. His vocal support for former President Donald Trump and his polarizing presence in politics have sparked protests outside Tesla showrooms and incidents of vandalism at company facilities. Earlier this month, Tesla reported the steepest sales drop in its history—an exodus of buyers that some say might be irreversible.

Some Tesla optimists believe Musk’s retreat from DOGE could stabilize the company. Tesla shares (TSLA) jumped more than 3% in early Wednesday trading, despite a staggering 71% drop in net income, driven by plummeting global sales.

Yet even longtime Tesla bull Dan Ives of Wedbush Securities warned that Musk’s political baggage could permanently suppress demand.

“The brand damage caused by Musk’s involvement in the White House and DOGE over the past few months won’t just vanish with this move,” Ives wrote in a note to clients. “Some of the harm is permanent—especially in Europe and the U.S.”

Musk, however, brushed off concerns about brand damage, attributing protests—without evidence—to paid agitators. He blamed Tesla’s historic sales drop on macroeconomic conditions and consumer uncertainty.

But the numbers tell a different story. While Tesla’s sales in the European Union fell 36% last month compared to a year ago, total battery electric vehicle (BEV) sales in the region actually rose more than 17%, according to industry data. Tesla’s first-quarter EU sales decline was even more severe.

Tesla CFO Vaibhav Taneja acknowledged the backlash.

“There’s been a lot of speculation about the reasons behind the drop in vehicle deliveries in Q1,” he said. “Vandalism and hostility toward our brand and employees have clearly played a role in certain markets.”

According to Ives, it was the dramatic sales decline that forced Musk to step away from DOGE.

“There’s no denying what happened this quarter—whether Musk admits it or not,” he told CNN.

“Brand Damage Is 100% Irreversible”

Some experts believe the damage may be deeper than Tesla loyalists are willing to admit.

“The idea that Musk focusing on Tesla will magically boost sales is complete garbage,” said Gordon Johnson of GLJ Research, one of Wall Street’s most vocal Tesla critics.

Johnson argues that Musk has alienated the environmentally conscious, liberal-leaning base that once formed Tesla’s core customer group—long before Trump’s reelection bid or Musk’s political endorsements.

Tesla sales began sliding in early 2024 after Musk reinstated extremist accounts on his social platform X, and posted far-right views of his own. Johnson says these actions have had a lasting impact, regardless of whether Musk ever sets foot in the Oval Office.

“The damage is 100% irreversible,” Johnson said.

While Musk may attract more conservative buyers, it’s unlikely to offset the loss of his original audience, said branding expert Kelly O’Keefe, founder of Brand Federation.

He went so far as to call Musk’s actions “brand homicide.”

“Tesla’s decline started even before the DOGE era,” O’Keefe noted. “This was a brand built on climate consciousness and environmental stewardship.”

Now, he says, the brand is spiraling.

“It used to be something people were proud to own,” he said. “I don’t know how you wipe the stain of Musk’s behavior off the Tesla name.”