Cathie Wood, founder and CEO of ARK Investment Management, believes that Tesla's recent sales decline may be partly due to general economic concerns, and not just because of consumer backlash triggered by the political actions of the company's CEO, Elon Musk.

Wood said in a video posted to Ark’s website on March 14: “Now, it’s obvious that political dynamics over the past few months have been affecting demand. We also believe that the economic outlook is affecting demand—not only for Tesla, but for all auto manufacturers.”

She added that it is difficult to analyze which factor has a greater impact on Tesla's sales.

Wood said, "It's hard to determine how much of the demand shock is caused by political attacks and how much is due to economic factors."

In recent weeks, Tesla dealerships and vehicles have been damaged across the United States. The company's market share in Europe has dropped significantly for two consecutive months, as some individuals who disagree with Musk's views have stopped purchasing Tesla vehicles. In China, one of Tesla's largest markets, the company is facing intense competition from local rivals. It has been reported that Tesla owners in the U.S. have been trading in their vehicles at record rates over the past two months.

At the same time, the entire auto industry is also struggling. In December last year, Nissan laid off 9,000 employees, and Volkswagen shut down factories in its home country of Germany. In the United States, the three major automakers—Ford, General Motors, and Stellantis—which had invested billions of dollars in diversifying from gasoline-powered vehicles to electric vehicles, now face a slowdown in electric vehicle sales. Now, these companies have to consider the new round of tariff policies proposed by the Trump administration, which could deal a particularly severe blow to the import-dependent auto industry.

From an overall economic perspective, U.S. consumer confidence has been declining since the beginning of the year and is currently at a one-year low.

According to Wood, Tesla's prospects depend on introducing new affordable models and improving its autonomous driving technology. For years, Tesla and Musk have been promoting cheaper electric vehicles priced around $25,000. In January, the company told investors that the model is expected to be launched in the first half of this year. However, in the past, similar plans have been canceled, dashing investors' hopes.

However, if Tesla wants to develop a truly autonomous vehicle, it will find itself less reliant on car sales and more focused on software business. Most of Wood's arguments are based on the concept that when Tesla finally launches an autonomous vehicle, it will immediately create a fleet from the millions of Teslas already on the road.RobotTaxi fleet.

Musk said in the Tesla's fourth-quarter and full-year 2022 earnings call in January, "The same assets, without any increase in cost, can have five times or even more of their current utility with just one software update."

So far, Tesla's autonomous driving system cannot operate completely without human supervision. However, the company has long considered this a priority.

Wood stated, "The autonomous taxi network is the largest artificial intelligence project in the world. Elon is focused on any bottlenecks, anything that hinders Tesla's progress or slows down Tesla's pace."