In New York, a yearly disclosure by Tesla highlights potential risks ranging from lawsuits to battery fire incidents, with little emphasis on CEO Elon Musk’s polarizing political ventures that could alienate certain customer segments.
According to business and marketing experts, Musk’s outspoken involvement in right-wing politics may dissuade potential buyers who disagree with his perspectives. Brand consultant Robert Passikoff underscores a fundamental marketing rule: avoid political entanglement to prevent product boycotts. Yet, the decline seems to have already begun.
Based on data from Jato Dynamics, Tesla’s sales plummeted by 45% in Europe this January, contrasting with a rise in overall electric vehicle sales. This European downturn aligns with declining sales in California—Tesla’s largest U.S. market—and the first global annual sales drop for the company last year.
John Parnell, a Model 3 owner based in California, expressed disenchantment, pointing out that Musk’s political stance is tarnishing Tesla’s brand. He decided to cancel his Cybertruck order, despite paying a $100 deposit. Industry analysts suggest it remains premature to determine the extent of damage caused by Musk’s politics due to other contributing factors. The upcoming Model Y’s release may have potential buyers delaying purchases, while European and Chinese manufacturers are introducing competitive EV products.
Analysts argue that Musk’s political statements could be detrimental to Tesla. With historical dominance in the EV market, Tesla now faces increasing competition—heightened by Musk’s divisive remarks. Morningstar’s Seth Goldstein points out that Musk’s assumption of invulnerability might backfire as Tesla encounters stiff competition.
January sales in Germany and France plunged around 60%, with a further 26% drop in France’s February figures. The Model 3, a consistent seller, saw a 33% decline in overall European sales, raising concerns about the impact of Musk’s politics. Initially dismissive of the boycott potential, Jato’s senior analyst Felipe Munoz now reevaluates his stance.
Once favored by environmentally conscious, progressive professionals, Musk’s past political alignments seemed to align with consumer values. However, Musk acknowledges a shift in perception, noting that his previous popularity with left-leaning supporters has waned.
Musk’s risky decision to align himself with Donald Trump, including financially supporting Trump’s campaign and leading his efficiency team, has sparked controversy. Musk publicly endorsed extreme right-wing, pro-Russian entities in Germany, criticized Canada as a legitimate nation, and condemned the British prime minister.
The backlash ensues. Protests erupted at U.S. Tesla dealerships, vehicles have faced vandalism, and mocking bumper stickers, such as “I bought it before Elon went nuts,” affixed to Tesla models. Effigies of Musk, derogatory artwork, and calls for Tesla boycotts have surfaced across Europe.
Tesla investor Ross Gerber notes the irony of possessing a leading automotive product plagued by poor marketing due to political intervention. He highlights the preference for products that resonate positively with consumers, rather than controversy.
While some believe boycotts may be ineffective, considering the significant investment a vehicle represents, Tesla’s financial decline is noteworthy. From Inauguration Day, Tesla stock plummeted by 37%, translating into a $550 billion loss in market value.
Despite the turmoil, certain loyalists, like Londoner Harry Chathli, remain committed to Tesla, praising Musk for revolutionizing transport and environmental perceptions. However, Tesla’s dwindling stock forecasts challenges exacerbated by Musk’s political affiliations.
