Tesla's shares have fallen nearly eight percent in the five days since the Department of Justice released emails showing CEO Elon Musk's correspondence with Jeffrey Epstein. The revelations contradict Musk's prior denials of involvement and exacerbate the company's ongoing brand and financial challenges. As Tesla shifts focus from cars to AI and robots, competitors are gaining ground in the electric vehicle market.
Late last month, the Department of Justice released new 'Epstein files' that revealed Tesla CEO Elon Musk was in regular correspondence with the late Jeffrey Epstein. In a 2012 email, Musk invited himself to Epstein's notorious Caribbean island, asking when the 'wildest party' would take place. This directly contradicted Musk's previous claims that he had 'refused' Epstein's offer, putting the billionaire in a difficult position.
Tesla's shares have plummeted almost eight percent over the last five days since the emails were made public. The company, already facing headwinds, reported its first-ever annual revenue decline for 2025, with sales slumping in three of the past four quarters and a 61 percent drop in profits in the fourth quarter of last year compared to the prior year. Despite a valuation exceeding $1.5 trillion, Tesla's brand standing has slid for the third consecutive year, according to a recent report from a leading brand valuation consultancy.
Musk's leadership has drawn criticism for inflammatory rhetoric and a pivot away from core automotive business. Tesla is ending production of its Model S and X vehicles to repurpose the factory for robot assembly, aligning with ambitions in humanoid robots and AI. Musk has promised that the Optimus robot will account for 80 percent of the company's value. Meanwhile, no fully new car model has launched since the Cybertruck in late 2023, which proved a flop.
'A big driver for the decline is lack of new products,' said Stephanie Valdez Streaty, director of industry insights at Cox Automotive, in comments to Bloomberg. 'Any automaker that doesn’t have new products is going to lose market share. Tesla needs new products.'
Competition intensifies as Volkswagen overtook Tesla in fully electric car sales in Europe last year, and Chinese rival BYD has become the world's top EV seller, outselling Tesla across Europe. Adding to distractions, Musk's SpaceX acquired his AI startup xAI, boosting SpaceX to a $1.25 trillion valuation and shifting more of Musk's net worth away from Tesla.
