Wedbush Dan Ives: Tesla Faces 'Brand Tornado Crisis' as Musk's DOGE Role Raises Concerns

Shares of tesla (TSLA) are down more than 42% year to date and in a significant development for Elon Musk's EV company, Tesla has initiated a safety recall for all 46,096 Cybertruck vehicles produced between November 2023 and February 2025, according to a National Highway Traffic Safety Administration (NHTSA) report filed on March 18, 2025.

Cybertruck Recall Details

The recall involves a defect in the "cant rail" - a cosmetic applique along the exterior of the vehicle that consists of an electrocoated steel stamping joined to a stainless steel panel with structural adhesive. According to the NHTSA report, the stainless steel panel may delaminate at the adhesive joint, potentially causing it to separate from the vehicle while driving.

Ask Aime: What impact will Tesla's Cybertruck recall have on its financial performance and stock price?

"If the cant rail stainless steel panel separates from the vehicle while in drive, it could create a road hazard for following motorists and increase their risk of injury or a collision," the report states.

Tesla has identified 151 warranty claims potentially related to this condition as of March 14, though the company reports no known collisions, injuries, or fatalities linked to the defect. The estimated percentage of vehicles with the defect is approximately 1% of the recalled population.

Vehicle owners may notice warning signs including "a detectable noise inside the cabin" or observe "the cant rail panel coming loose or separating from the vehicle."

Tesla plans to replace the cant rail assembly at no charge to customers. The remedy component will use "a different structural adhesive not prone to environmental embrittlement," reinforced with a stud welded to the stainless panel and a nut clamping the steel panel to the vehicle structure.

While Tesla service centers will be notified around March 20, 2025, owner notification letters are not scheduled to be mailed until May 19, 2025. Production vehicles are expected to begin receiving the remedy around March 21, 2025.

Broader Context: Tesla's Leadership Challenges

This recall comes at a particularly challenging time for Tesla, which according to Wedbush analyst Dan Ives is "going through a crisis" related to CEO Elon Musk's involvement with the Department of Government Efficiency (DOGE) following President Trump's return to the White House.

Ives characterizes the situation as a "brand tornado crisis moment for Musk and Tesla," citing incidents of "violence at Tesla dealers, cars being keyed in parking lots, social movements against Musk around the globe" that have created "a massive overhang for Tesla's stock."

According to Ives, the close association between Musk and Tesla - "Tesla is Musk and Musk is Tesla" - means the company's future depends on how Musk handles the next few months. Despite maintaining an "OUTPERFORM" rating and $550 price target for Tesla stock, Ives urges Musk to take specific actions to address the company's challenges.

They include, formally announcing Musk is going to balance DOGE and being Tesla CEO. " We would expect this to happen either before or during the 1Q earnings conference call in early May," Ives said in his note to clients. He's also calling on Tesla to give the roadmap and timing for the new lower cost vehicles to be released into the market in 2025 along with the unsupervised FSD roll-out in Austin in June.

The first quarter earnings call expected in early May could be a pivotal moment for the company to address both the Cybertruck safety concerns and the broader challenges described by Ives.