Musk risks further Tesla sales decline as he calls on US to stop sponsoring Europe’s defense by quitting NATO

Billionaire Elon Musk could cost Tesla shareholders and himself more money with his latest lobby for the US to exit from NATO because he believes it “doesn’t make sense for America to pay for the defense of Europe.”

Musk made the statement early Sunday, responding to a post on X that declared the US needs to “Exit NATO *now*!”

“We really should,” the billionaire and chief executive officer reiterated.

Why Musk is calling for a NATO exit now 

If it had been left to him, Elon Musk would have had the US exit NATO already. Notably, the US is still a part of the union, further proof that, unlike what trolls insinuate, Trump is still the one who makes the decisions. 

Musk’s latest statement regarding NATO comes some days after he wrote on X that he agrees with a conservative commentator’s suggestion that the US should leave NATO and the United Nations.

His comments come at an auspicious time as the future of the North Atlantic Treaty Organization, which will mark its 76th anniversary in April, is to be decided. 

According to an NBC report from March 6, Trump had discussed with aides calibrating US engagement with NATO in a way that favors members of the alliance known to spend an inflexible percentage of their GDP on defense.

In a conversation with reporters the same day, Trump said NATO allies now know that if they have no plans to pay their bills, he is not ready to defend them.

“It’s common sense, right?” Trump asked the reporters as they interacted in the Oval Office. “If they don’t pay, I’m not going to defend them. No, I’m not going to defend them.”

Musk agrees with Trump and has been vocal about wanting the US to exit NATO despite the dangers his outspokenness may pose to his Tesla business in Europe. 

Already Tesla’s stock has experienced a significant decline, canceling out the $700 billion boost it got following the 2020 election when people thought his relationship with Trump would cause the stock to soar. 

That did not happen, and now, growing anxiety over Tesla’s core business of car sales is overshadowing the previous gains, especially since sales continue to decline globally.

The increasing competition, particularly from Chinese automaker BYD, which is rapidly gaining market share, is also not helping matters. According to reports, vehicle sales and shipments have fallen in key markets, with China — its biggest market — reporting a 49% drop in Tesla wholesales last month, according to preliminary data from China’s Passenger Car Association. 

Meanwhile, in France, registrations fell 26% in February following an even slower January, while overall European sales declined 45% in January. The decline has even forced Tesla to implement buyer perks such as free lifetime supercharging and attractive financing options to boost sales. 

As a result, analysts have been suggesting that Tesla’s future stock value may depend more on the advancements it makes in autonomous driving technology rather than traditional car sales.

How does the US’s involvement with NATO affect Europe? 

Europe, to a large scale, disarmed after the Cold War, and in the years since, has become reliant on the US for many things, including communications, intelligence, logistics as well as strategic military leadership and firepower.

The US is regarded as a great military power with capabilities that surpass what all the other countries under NATO combined have and this is thanks to its huge defense budget. 

In 2024 alone, America reportedly spent an estimated $877 billion on defense making it the largest NATO contributor. For context, the UK, the second largest contributor to NATO spent about $68 billion. 

Europe benefits greatly from the US’s involvement with NATO in various ways but the most important would be the Article 5 principle which is collective defense. 

According to Article 5, an attack on one NATO member is an attack on all, and America’s military might is what enforces this commitment, ensuring that enemies know they will have to fight an overwhelming force if they invoke Article 5. 

If the US pulls out of NATO, Europe will find itself at its most vulnerable, not only because of the absence of the US’s powerful military but also because without American leadership, it would be more difficult to coordinate NATO’s 31 member states. 

In the past, European leaders have faced backlash from their people who argue that they’re not funding the military enough, which is fueling a dependence on America’s firepower. 

As such, in the face of America’s grumbling and calls for a NATO exit, European leaders are scrambling to make contingencies for the eventuality of the US leaving NATO. 

How Europe plans to move forward

European Union leaders came together in Brussels for an emergency summit last week and the agenda was to massively increase defense spending.

At the summit, they discussed a European Commission proposal that includes as much as €150 billion ($162.5 billion) in loans to member states for defense, as well as plans that would permit countries to use their national budgets to potentially spend €650 billion on defense over four years without triggering budgetary penalties.

“In the last weeks, we’ve seen what I would call quite a turbulent development,” EU Defense Commissioner Andrius Kubilius said on Bloomberg TV on Friday. “It’s still not perhaps very clear what the American strategy will finally be.”

According to a 2023 law, a president can’t unilaterally withdraw from the alliance without a two-thirds supermajority in the Senate or an act of Congress. 

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