Tesla's most bullish Wall Street analyst said Elon Musk's company is in a "crisis," and only its CEO can fix it.
Wedbush Securities analyst Dan Ives, who has consistently been optimistic about Tesla's long-term outlook, wrote in a joint note on Wednesday that the EV maker is facing a "defining chapter" in its trajectory, and the outcome will depend on Musk.
"Lets call it like it is: Tesla is going through a crisis and there is one person who can fix it....Musk," Ives wrote in his memo.
For nearly nine weeks, Tesla has been on a historic decline, with its stock sitting 53% below its all-time high from mid-December. The company is battered by increasing competition in China, sagging global vehicle sales, and a reputation problem that investors worry is being caused by a distracted CEO.
"If you agree or disagree with DOGE it misses the point that by Musk spending 110% of his time with DOGE (and not as Tesla CEO) since President Trump got back into the White House this has essentially turned Tesla into a political symbol....and this is a bad thing," Ives wrote on Wednesday.
Ives added in his note that Tesla is at a crossroads and Musk needs to do two things if he wants to "end this crisis and make sure it does not snowball into a much more black swan event for the Tesla brand over the coming years."
Firstly, Ives said that Musk needs to make a statement, either before or during Tesla's first quarterly earnings call in early May, on how he will manage his roles at Tesla and the White House DOGE office.
"Investors need to see Musk take a step back and balance his DOGE and Tesla CEO roles," Ives said.
If Musk does take a step back, the "heat" around his DOGE work will "start to dissipate," Ives said. That "will leave a scar for Tesla" but won't amount to "permanent brand damage," Ives added.
Secondly, Ives said that Musk must provide a "roadmap and timing for the new lower cost vehicles" Tesla is releasing this year, and more guidance on the "unsupervised FSD roll-out in Austin in June."
Ives added that investors need to hear from Musk, particularly given "the Model Y refresh, inventory issues, and a host of demand issues with Musk brand damage a worry."
Tesla and Ives did not respond to requests for comment from BI.
Musk pitched his idea of a government efficiency commission to President Donald Trump during a livestream on X in August, and said he would be "happy to help out" with slashing federal spending.
To be sure, Musk's relationship with Trump was initially viewed as a positive development for his businesses.
Musk's net worth grew by up as much as $224 billion following Trump's election victory in November, per Bloomberg's estimates. But his net worth has since fallen by around $122 billion this year mainly due to a decline in Tesla's stock prices.
In mid-December, Tesla shares reached a peak closing price of $479. The company's shares closed at about $235 on Wednesday.
Some investors are less concerned than Ives.
Tsai Capital's president and chief investment officer, Christopher Tsai, told Business Insider this week that it is important to distinguish between Musk's work with DOGE, and his involvement with the US government.
"Elon being involved in the government is allowing him to shape policy," Tsai said, adding that the "negative market sentiment" over Musk and DOGE will "disappear at some point."
