Overview:
In a letter sent today to the CEOs of BlackRock, Vanguard, State Street, T. Rowe Price, Fidelity, and TIAA, the AFT urging immediate action to protect pension funds and retirement savings tied to the struggling automaker.
The American Federation of Teachers (AFT) President, Randi Weingarten is calling on the nation’s largest asset management firms to reassess their investments in Tesla as the company faces a steep decline in value and increased financial instability. In a letter sent today to the CEOs of BlackRock, Vanguard, State Street, T. Rowe Price, Fidelity, and TIAA, urging immediate action to protect pension funds and retirement savings tied to the struggling automaker.
“This is about safeguarding workers’ retirements. Less than a month ago, when J.P. Morgan analysts wrote that Tesla shares ‘continue to strike us as having become completely divorced from the fundamentals,’ we got concerned,” AFT President Randi Weingarten said in the letter, “And we’ve gotten more and more worried as the days and weeks have worn on, because we’re talking about working people’s deferred wages and retirement income. Just this week, we saw Tesla stock continue to sink faster than a Cybertruck in quicksand, as European sales fell off a cliff. So, we knew we needed to act.”
Tesla’s stock has plummeted 23% since the start of the year, far outpacing the Nasdaq’s modest 1.3% decline. The downturn has raised alarms among AFT leaders, given that the union’s 1.8 million members—educators, healthcare professionals, and public-sector workers—have a significant portion of their deferred wages invested in pension funds totaling approximately $4 trillion.
These funds and individual retirement accounts managed by these massive asset managers contain billions of dollars in Tesla shares.
A Troubling Financial Outlook
Tesla’s recent financial disclosures paint a concerning picture. The company reported a Q4 2024 operating income of $1.6 billion, marking a 23% year-over-year profit decline. Net income for the quarter stood at $2.31 billion—down a staggering 71% from the $7.93 billion profit recorded during the same period in 2023. Tesla’s vehicle profit margin also slipped to 13.6%, missing analyst expectations and highlighting growing cost pressures.
Adding to the turmoil, Tesla’s sales have dropped in key markets. In California, a central EV hub, overall sales fell by 8% in Q4, with Model 3 registrations plummeting by over a third. Meanwhile, Tesla’s sales in Germany, the largest auto market in Europe, have plunged by 60%.
“These are not isolated incidents but rather a troubling pattern that suggests Tesla’s pricing power is eroding, leaving it vulnerable to market fluctuations and increased competition,” Weingarten warned in her letter.
Mounting Competition and Brand Decline
Tesla’s once-dominant market position is under siege from competitors. A consortium of major automakers—including Mercedes, BMW, General Motors, Stellantis, Honda, Hyundai, and Kia—has launched IONNA, a rival charging network expected to establish 30,000 charging stations by 2030. Toyota’s recent addition to this initiative further intensifies the competitive threat to Tesla’s charging infrastructure.
Meanwhile, Tesla’s reputation has suffered. The American EV Jobs Alliance found that “EV swing consumers”—those open to buying EVs once costs decline—now hold an increasingly hostile view of Tesla CEO Elon Musk, which could hinder customer expansion. According to Stifel analyst Stephen Gengaro, Tesla’s net favorability is at an all-time low of 3%, down from 9% in early 2024.
Concerns Over Leadership and Risky Investments
Further complicating matters, Tesla recently proposed a $56 billion pay package for Musk, despite its financial struggles. Critics argue that this dilutes shareholder value and raises concerns about governance and fiscal responsibility.
Adding to the instability, Musk’s involvement in the Trump administration has introduced political uncertainty for Tesla. The administration recently announced a halt to federal funding for expanding the national EV charging network—a project that Tesla had heavily relied on, securing $41 million in grants for 99 sites before the funding was cut.
Tesla has attempted to counteract these challenges with high-profile announcements, but many have lacked concrete execution. For instance, Bloomberg recently reported that Tesla’s self-driving ride-hailing service remains significantly behind competitors like Waymo. Additionally, the U.S. State Department quickly debunked rumors about the Trump administration purchasing $400 million in armored Tesla vehicles.
AFT Demands Action to Protect Workers’ Retirement Security
The AFT Trustee Council, which represents more than 50 AFT members serving as trustees on 27 public pension funds—including some of the largest in the country, such as the California State Teachers’ Retirement System and the New York State Teachers’ Retirement System—has long worked to safeguard workers’ retirement assets. The AFT has also provided resources to evaluate investments in companies with reputational risks, such as gun manufacturers and private prisons.
Given the significant exposure of pension funds and individual retirement accounts to Tesla’s volatile stock, Weingarten requests a response from asset managers outlining their firms’ assessment of Tesla’s current valuation and the steps they are taking to mitigate risks for AFT members.
With billions of dollars in retirement savings at stake, the response from BlackRock, Vanguard, and other financial giants will be closely watched as the situation unfolds.
