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

On ‌August 7th, Tesla, Inc. faced a significant blow to its reputation, according to financial analysts, due to the controversial actions of its CEO, Elon Musk. The company, known ‌for its innovative ‍electric vehicles and cutting-edge technology, has been under scrutiny in recent months following a series of erratic and unwise statements made by Musk on⁣ social media.

The incident that sparked this recent downturn in Tesla’s reputation occurred when Musk ‍tweeted that he was considering taking the company ‍private at a price of $420 per share. This tweet caused a whirlwind of speculation and confusion in the financial markets, leading to a temporary surge in Tesla’s stock price followed by a sharp ​decline as investors questioned‍ the legitimacy of Musk’s claim.

In addition to this, Musk made further ⁢headlines when he later gave an interview to The ⁤New York Times ‌in which he openly discussed his struggles with exhaustion and the toll that his work at Tesla was taking on his personal life. Musk’s⁤ candid admission ⁣of ⁤his mental and emotional state⁣ seemed to confirm long-standing rumors of turmoil within the‌ company and raised concerns about his ability to effectively lead‍ Tesla into the future.

Analysts have⁢ since pointed to these incidents as evidence of a broader pattern⁢ of behavior by Musk that is ​damaging Tesla’s reputation and undermining investor confidence in the company. Some have even gone ⁤so far as ‍to suggest that Musk’s actions could ‌potentially ‍lead to his removal as⁤ CEO, a move⁣ that could have far-reaching implications for the future of Tesla.

In​ response to these concerns, Tesla’s board of directors released a statement expressing their​ continued support for Musk and their confidence in his leadership of the company. However, many investors remain skeptical and are calling ‍for greater transparency and accountability from both Musk and ⁤the board in order to restore faith in Tesla’s long-term prospects.

Ultimately, the reputational ⁣downfall that Tesla is facing as⁣ a result of Elon Musk’s actions serves as a cautionary tale for all companies, highlighting the importance of strong leadership, clear communication, and responsible behavior at the highest levels of an⁢ organization. Only time will tell whether⁢ Tesla can weather this storm and emerge stronger on​ the other side, but one thing is certain – the stakes have never been higher for the electric carmaker and its embattled CEO.