What Tesla stockholders need to know about Nato

Subscribe to enjoy similar stories. Tesla CEO Elon Musk suggested the U.S. exit the North Atlantic Treaty Organization, or NATO.

It’s yet another politically divisive issue he’s weighed in on, leaving investors to learn about another thing that could impact the shares of their electric vehicle maker. “We really should," tweeted Musk in response to a post about the U.S. exiting NATO.

“Doesn’t make sense for America to pay for the defense of Europe." NATO was created in 1949 by the U.S., Canada, and several Western European nations to provide collective security against the former Soviet Union. Secondary goals of the alliance included halting a revival of “nationalist militarism in Europe through a strong North American presence on the continent, and encouraging European political integration," reads part of NATO’s website. NATO’s annual budget is currently about $5 billion.

The U.S. pays a little less than $800 million of that or about what the Defense Department spends in eight hours. The issue doesn’t appear as much about the NATO budget as it does about overall military spending.

NATO nations are supposed to spend about 2% of GDP on national defense. NATO nations were below the 2% threshold for most of the past decade, reaching 2% in 2024, according to NATO data. The U.S.

spends almost $1 trillion a year on defense, closer to 3% of GDP. Spending in the Euro area is closer to $300 billion and almost 2% of GDP, according to Goldman Sachs. Investors have little choice but to brush up on NATO.

Musk’s activities in Washington have become a risk factor for shares of their EV maker. Tesla sales in Europe and the U.S. were weak to start the year, creating the perception that Musk is alienating his core buyers: political