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NEW YORK: Elon Musk has been called a Moonshot Master, the Edison of Our Age and the Architect of the Future, but he’s got a big problem at his car company and it’s not clear he can fix it: damage to its brand.
Sales have plunged for Tesla amid protests and boycotts over Musk’s embrace of far right-wing views. Profits have been sliced by two-thirds so far this year, and rivals from China, Europe and the US are pouncing.
On Tuesday came some relief as Musk announced in an earnings call with investors that he would be scaling back his government cost-cutting job in Washington to a “day or two per week” to focus more on his old job as Tesla’s boss.
Investors pushed up Tesla’s stock 5 percent Wednesday, though there are plenty of challenges ahead.
Who wants a Tesla?
Musk seemed to downplay the role that brand damage played in the drop in first-quarter sales on the investor call. Instead, he emphasized something more fleeting — an upgrade to Tesla’s best-selling Model Y that forced a shutdown of factories and pinched both supply and demand.
While financial analysts following the company have noted that potential buyers probably held back while waiting for the upgrade, hurting results, even the most bullish among them say the brand damage is real, and more worrisome.
“This is a full blown crisis,” said Wedbush Securities’ normally upbeat Dan Ives earlier this month. In a note to its clients, JP Morgan warned of “unprecedented brand damage.”
Musk’s take on the protests
Musk dismissed the protests against Tesla on the call as the work of people angry at his leadership of the Department of Government Efficiency because “those who are receiving the waste and fraud wish it to continue.”
But the protests in Europe, thousands of miles from Washington, came after Musk supported far-right politicians there. Angry Europeans hung Musk in effigy in Milan, projected an image of him doing a straight-arm salute on a Tesla factory in Berlin and put up posters in London urging people not to buy “Swasticars” from him.
Sales in Europe have gone into a free fall in the first three months of this year — down 39 percent. In Germany, sales plunged 62 percent.
Another worrying sign: On Tuesday, Tesla backed off its earlier promise that sales would recover this year after dropping in 2024 for the first time a dozen years. Tesla said the global trade situation was too uncertain and declined to repeat the forecast.
Here come the rivals
Meanwhile, Tesla’s competition is stealing its customers.
Among its fiercest rivals now is Chinese giant BYD. Earlier this year, the EV maker announced it had developed an electric battery that can charge within minutes. And Tesla’s European rivals have begun offering new models with advanced technology that is making them real Tesla alternatives just as popular opinion has turned against Musk.
Tesla’s share of the EV market in the US has dropped from two-thirds to less than half, according to Cox Automotive.
Pinning hopes on cybercabs
Another rival, Google parent Alphabet, is already ahead of Tesla in an area that Musk has promised will help remake his company: Cybercabs.
One of the highlights of Tesla’s call Tuesday was Musk sticking with his previous prediction that it will l aunch driverless cabs without steering wheels and pedals in Austin, Texas, in June, and in other cities soon after.
But Google’s service, called Waymo, already has logged millions of driverless cybercab trips in San Francisco, Phoenix, Los Angeles, and Austin as part of a partnership with ride-hailing leader Uber.
A driverless future for Tesla owners?
Musk also told analysts that this driverless capability will be available on the Tesla vehicles already on the road through software updates over the air, and put a timeline on it: “There will be millions of Teslas operating autonomously in the second half of the year.”
But he has made similar promises before, only to miss his deadlines, such as in April 2019 when he vowed full automation by the end of the next year. He repeated the prediction, moving up the date, several more times, in following years.
A big problem is federal investigators have not given the all-clear that Tesla vehicles can drive completely on their own safely. Among other probes, safety regulators are looking into Tesla’s so-called Full Self-Driving, which is only partial self-driving, for its tie to accidents in low-visibility conditions like when there is sun glare.
On the positive side
In competition with rivals in the US, Tesla currently has one clear advantage: It will get hurt by less by tariffs because most of its vehicles are built in the countries where they are sold, including those in its biggest market, the US
“Tariffs are still tough on a company where margins are still low, but we do have localized supply chains,” Musk said Tuesday. “That puts us in a strong position.”
The company also reconfirmed that a cheaper version of its best-selling vehicle, the Model Y sport utility vehicle, will be ready for customers in the first half of this year. That could help boost sales.
Another plus: The company had a blow out first quarter in its energy storage business. And Musk has promised to be producing 5,000 Optimus robots, another Tesla business, by the end of the year.
Pricey stock
Even after falling nearly 50 percent from its December highs, Tesla’s stock is still very richly valued based on the one yardstick that really matters in the long run: its earnings.
At 110 times its expected per share earnings this year, the stock is valued more than 25 times higher than General Motors. The average stock on in the S&P 500 index trades at less than 20 times earnings.
That leaves Tesla little margin for error if something goes wrong.

SRINAGAR/NEW DELHI: India announced a raft of measures to downgrade its ties with Pakistan on Wednesday, a day after suspected militants killed 26 men at a tourist destination in Kashmir in the worst attack on civilians in the country in nearly two decades.
Diplomatic ties between the nuclear-armed South Asian neighbors were weak even before the latest measures were announced as Pakistan had expelled India’s envoy and not posted its own ambassador in New Delhi after India revoked the special status of Kashmir in 2019.
Pakistan had also halted its main train service to India and banned Indian films, seeking to exert diplomatic pressure.
Tuesday’s attack is seen as a setback to what Indian Prime Minister Narendra Modi and his Hindu nationalist Bharatiya Janata Party have projected as a major achievement in revoking the semi-autonomous status Jammu and Kashmir enjoyed and bringing peace and development to the long-troubled Muslim-majority region.

On Wednesday, Indian Foreign Secretary Vikram Misri told a media briefing that the cross-border involvement in the Kashmir attack was underscored at a special security cabinet meeting, prompting it to act against Pakistan.
He said New Delhi would immediately suspend the 1960 Indus Waters Treaty “until Pakistan credibly and irrevocably abjures its support for cross-border terrorism.”
The treaty, mediated by the World Bank, split the Indus River and its tributaries between the neighbors and regulated the sharing of water. It had so far withstood even wars between the neighbors.
Pakistan is heavily dependent on water flowing downstream from this river system from Indian Kashmir for its hydropower and irrigation needs. Suspending the treaty would allow India to deny Pakistan its share of the waters.
India also closed the only open land border crossing point between the two countries and said that those who have crossed into India can return through the point before May 1.
With no direct flights operating between the two countries, the move severs all transport links between them.
Pakistani nationals will not be permitted to travel to India under special South Asian visas, all such existing visas were canceled and Pakistanis in India under such visas had 48 hours to leave, Misri said.
All defense advisers in the Pakistani mission in New Delhi were declared persona non grata and given a week to leave. India will pull out its own defense advisers in Pakistan and also reduce staff size at its mission in Islamabad to 30 from 55, Misri said.
“The CCS reviewed the overall security situation and directed all forces to maintain high vigil,” Misri, the most senior diplomat in the foreign ministry, said referring to the security cabinet.
“It resolved that the perpetrators of the attack will be brought to justice and their sponsors held to account...India will be unrelenting in the pursuit of those who have committed acts of terror, or conspired to make them possible,” he said.
There was no immediate response to the Indian announcement from Pakistan’s Foreign Office.
Pakistani Prime Minister Shehbaz Sharif has called a meeting of the National Security Committee on Thursday morning to respond to the Indian government’s statement, Pakistan’s Foreign Minister Ishaq Dar posted on X.

Tourist boom
India’s response came a day after the attack in the Baisaran Valley in the Pahalgam area of the scenic, Himalayan federal territory of Jammu and Kashmir.
The region has been at the heart of India-Pakistan animosity for decades and the site of multiple wars, insurgency and diplomatic standoffs.
The dead included 25 Indians and one Nepalese national and at least 17 people were also injured in the shooting that took place on Tuesday.
It was the worst attack on civilians in India since the 2008 Mumbai shootings, and shattered the relative calm in Kashmir, where tourism has boomed as an anti-India insurgency has waned in recent years.
A little-known militant group, the “Kashmir Resistance,” claimed responsibility for the attack in a social media message. It expressed discontent that more than 85,000 “outsiders” had been settled in the region, spurring a “demographic change.”
Indian security agencies say Kashmir Resistance, also known as The Resistance Front, is a front for Pakistan-based militant organizations such as Lashkar-e-Taiba and Hizbul Mujahideen.
Pakistan denies accusations that it supports militant violence in Kashmir and says it only provides moral, political and diplomatic support to the insurgency there.
“We are concerned at the loss of tourists’ lives,” Pakistani foreign ministry spokesperson Shafqat Ali Khan said in a statement earlier on Wednesday. “We extend our condolences to the near ones of the deceased and wish the injured a speedy recovery.”

Setback to Modi
In Kashmir, security forces rushed to the Pahalgam area and began combing the forests there in search of the attackers.
Police also released sketches of three of the four suspected attackers, who were dressed in traditional long shirts and loose trousers and one of them was wearing a bodycam, one security source said.

There were about 1,000 tourists and about 300 local service providers and workers in the valley when the attack took place, he said.
On Wednesday, the federal territory shut down in protest against the attack on tourists, whose rising numbers have helped the local economy.
Protesters turned out in several locations shouting slogans such as “Stop killing innocents,” “Tourists are our lives,” “It is an attack on us.”
“I want to say to the people of the country that we are ashamed, Kashmir is ashamed,” former Jammu and Kashmir Chief Minister Mehbooba Mufti said. “We are standing with you in this time of crisis.”
Airlines were operating extra flights through Wednesday from Srinagar, the summer capital of the territory, as visitors were rushing out of the region, officials said.
Militant violence has afflicted Kashmir, claimed in full but ruled in part by both Hindu-majority India and Islamic Pakistan, since the anti-Indian insurgency began in 1989. Tens of thousands of people have been killed, although violence has tapered off in recent years.