Tesla Faces ‘Reputational Downfall’ Thanks To Elon Musk, Analyst Says

Tesla Faces ‘Reputational Downfall’ Thanks To Elon Musk, Analyst Says

Few technology company CEOs have polarized audiences like Elon Musk. Right from his online crusade against what he calls the “woke mind virus,” to profane attacks against anyone crossing his ideological paths, and publicly analyzing cash flows of rival EV brands in an amateur-ish manner, Musk’s actions seem to have consequences for Tesla, his biggest company.

The Austin-headquartered brand employs thousands of workers across the globe and is responsible for leading the charge with EVs unlike any other U.S. carmaker. What Tesla has done for electrification is unmatched. But with the terms Tesla and Musk being inseparable, it’s unclear how detached buyers can be from the CEO’s controversies.

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Is Elon Musk’s unrestrained online presence affecting Tesla?

One report says yes. Musk, in recent years, has metamorphosed into a controversial online personality, often sparring with people who disagree with him, contradicting his own free-speech absolutism ideals, and embracing a party hell-bent on reversing EV policies. 

Market intelligence firm Caliber said that the share of potential Tesla buyers in the U.S. is shrinking. It attributes the drop to Musk’s shenanigans. The report obtained by Reuters states that Caliber’s “consideration score” for buyers wanting Teslas has shrunk to 31% in February 2024 from a high of 70% in November 2021.

Meanwhile, the consideration scores for Mercedes-Benz, BMW, and Audi have increased, reaching 44-47%. Musk has previously said that Tesla was “recession resilient” but that “even the best ship is still going to have tough times.” Caliber CEO Shahar Silbershatz said, “It’s very likely that Musk himself is contributing to the reputational downfall.”

Caliber’s survey, the sample size of which was unknown at the time of publication, states that 83% of Americans connect Musk with Tesla.

Elon Musk speaking at the Cyber Rodeo event held at Giga Texas

But Musk’s chronic use of X (formerly Twitter), which he purchased in 2022, might be yielding some negative results for his electric car company. Moreover, he has increasingly embraced the Republican party, members of which have waged a war against EVs and have even threatened to overturn EPA regulations that aim to reduce air pollution, tackle climate change and improve public health.

Add to that the threat of cheap Chinese EVs entering the U.S. through the Mexico backdoor, a few months of slower-than-expected growth rate in EV sales, and increasing competition has likely put Tesla under pressure.

But Caliber’s so-called consideration scores only tell one side of the story. Several data insights firms, including S&P Global, Wards Auto and Citi, have stated that Tesla ranks at the top when it comes to brand loyalty. Most Model 3 and Model Y customers are repeat buyers. In the first half of 2023, over 68% of Tesla customers were repeat buyers, meaning just about 31% left Tesla and picked another brand, S&P data showed.

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Moreover, Tesla had record sales in 2023, so it’s hard to believe that people are moving away from the brand, or considering it less than before.

Musk’s shenanigans might not be the only aspect hurting Tesla, but there’s no ruling out the possibility that they’re coalescing with several other factors to potentially put the brand in a difficult position.

You can also argue that if you were to colonize Mars, electrify roads across the globe, effectively run multiple companies, and care for nearly a dozen children, a little less smartphone screen time would only be healthy. 

Contact the author: suvrat.kothari@insideevs.com

Tesla, Inc., the American electric vehicle and clean energy company led by billionaire entrepreneur Elon Musk, is reportedly facing a “reputational downfall” due to Musk’s controversial behavior and statements, according to analysts.

Musk, who co-founded Tesla in 2003 and has served as CEO since then, is known for his brash and unconventional style, as well as his active presence on social media. However, his tweets and public statements have often landed him in hot water, causing disruptions in Tesla’s operations and impacting the company’s reputation.

Recently, Musk made headlines for posting misleading and irresponsible tweets about the COVID-19 pandemic and the efficacy of vaccines. These actions not only attracted criticism from public health officials and scientists but also raised concerns about Tesla’s credibility and corporate image.

In addition, Musk has been accused of engaging in questionable business practices, such as misleading investors and manipulating stock prices. His erratic behavior and controversial statements have sparked controversy and led to increased scrutiny from regulators and shareholders.

As a result, some analysts believe that Tesla is facing a “reputational downfall” that could negatively impact the company’s brand value and overall performance. The market perception of Tesla and its products may suffer as a result of Musk’s behavior, potentially leading to decreased consumer trust and investor confidence.

Despite its innovative technology and strong market presence, Tesla’s success may be overshadowed by Musk’s actions and statements. In order to prevent further damage to its reputation, the company must address these concerns and take steps to ensure responsible leadership and ethical business practices.

In conclusion, Tesla is facing a challenging situation as it navigates the fallout from Elon Musk’s controversial behavior. The company must prioritize transparency, accountability, and integrity in order to rebuild trust and maintain its standing in the market. Only time will tell if Tesla can weather this storm and emerge stronger on the other side.