In 2024, Tesla faced its first-ever annual decline in vehicle deliveries and was recently hit with another setback, scrapping plans to launch its compact SUV (codenamed E41), which was originally slated for release this year.
The compact SUV was poised to be Tesla’s next entry-level offering, positioned below the Model Y and following in the footsteps of the Model 3. Tesla cited decreased demand as the reason for the cancellation, but industry experts are offering a range of alternative explanations. In a seemingly endless string of bad news, Tesla’s stock price has declined by over 25% compared to last year.
Tesla’s now-canceled compact SUV was intended to be a strategic weapon against the rising tide of homegrown Chinese electric vehicle (EV) brands. Its cancellation leaves Tesla more vulnerable in the increasingly competitive Chinese market, where the company’s aging product lineup is already struggling to maintain its foothold.
However, a recent report from the Economic Times suggests that Musk’s departure from the Trump administration’s Department of Government Efficiency (DOGE) could boost Tesla’s prospects. Musk’s tenure as a special government employee in the DOGE is set to expire at the end of next month.
Musk has recently found himself caught in the crossfire of American politics, struggling to respond effectively to criticism from Democratic factions and losing ground in the power struggles within the Trump administration. The Democratic Party has been particularly vocal in its criticism of Musk’s leadership of DOGE.
In related news, The Washington Post reported that DOGE employees have already secured positions within federal agencies, ensuring continuity of operations even if Musk were to resign, further diminishing Musk’s role and influence within the department.
