Would-be Tesla buyers snub company as Musk's reputation dips

Would-be Tesla buyers snub company as Musk’s reputation dips

/ 06:35 AM April 02, 2024

Would-be Tesla buyers snub company as Musk's reputation dips

Elon Musk, Chief Executive Officer of SpaceX and Tesla and owner of Twitter, gestures as he attends the Viva Technology conference in Paris, France, June 16, 2023. REUTERS/Gonzalo Fuentes/File photo

SAN FRANCISCO/LONDON — The ranks of would-be Tesla buyers in the United States are shrinking, according to a survey by market intelligence firm Caliber, which attributed the drop in part to CEO Elon Musk’s polarizing persona.

While Tesla continued to post strong sales growth last year, helped by aggressive price cuts, the electric-vehicle maker is expected to report weak quarterly sales as early as Tuesday.


Caliber’s “consideration score” for Tesla, provided exclusively to Reuters, fell to 31 percent in February, less than half its high of 70 percent in November 2021 when it started tracking consumer interest in the brand.


Tesla’s consideration score fell 8 percentage points from January alone even as Caliber’s scores for Mercedes, BMW and Audi, which produce gas as well as EV models, inched up during that same period, reaching 44-47 percent.

Tesla did not respond to a request for comment. Musk in the past has blamed high-interest rates for curbing consumer demand for big ticket items like cars.

Caliber cited strong associations between Tesla’s reputation and that of Musk for the scores.

‘Reputational downfall’

“It’s very likely that Musk himself is contributing to the reputational downfall,” Caliber CEO Shahar Silbershatz told Reuters, saying his company’s survey shows 83 percent of Americans connect Musk with Tesla.

Reuters spoke to five marketing, polling and car experts who said controversies surrounding Musk’s increasingly right-wing politics and public statements are weighing on Tesla’s brand and demand.

“It is hard enough to win sales without getting into politics,” said Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management.


READ: Tesla erases $80B in valuation after Musk’s sales warning

Economic fears, the lack of affordable new models and rising competition from cheaper rivals like China’s BYD have also been cited by Wall Street analysts as putting pressure on Tesla.

Overall electric vehicle sales in the U.S. are forecast to increase 15 percent in the first quarter of this year, according to estimates by researcher Cox Automotive. Tesla sales are projected to increase by 3 percent.

“The EV slowdown is shaping up to be a Tesla slowdown,” Cox analyst Stephanie Valdez Streaty said during a conference call Thursday.

New car registrations for Teslas in California- their biggest market in the U.S. – posted their first drop in over three years in the fourth quarter of 2023 even as EV sales rose overall.

At least five analysts cut Tesla’s target price last month, saying the automaker could post disappointing first-quarter delivery results. Tesla shares are down nearly 30 percent year to date.

READ: BYD overtakes Tesla as world’s top EV maker

Musk’s outsized personality benefited Tesla as he promoted tackling climate change by reimagining cars as stylish, electric computers on wheels that could beat gasoline guzzlers in looks, performance and handling.

Tesla achieved breakneck annual sales growth for more than a decade.

Courted controversy

In recent years, the billionaire courted controversy with comments and actions including his embrace of the Republican party and endorsement of anti-semitic comments on X. Musk has denied being anti-semitic.

When asked by an investor during a January 2023 conference call if his political comments were hurting Tesla’s brand and sales, Musk said he was “reasonably popular,” referring to his then 127 million followers on X, formerly known as Twitter.

“Whether you hate me, like me or are indifferent, do you want the best car, or do you not want the best car?” Musk said at another event in November.

Brand valuation consultancy Brand Finance found Tesla’s reputation fell in 2023 in the United States, the Netherlands, France, United Kingdom, and Australia. Tesla’s reputation did not suffer in China, where access to news on the company and its CEO may have been limited, and Germany.

In the U.S., a survey by consumer analytics firm CivicScience shown exclusively to Reuters found that 42 percent of respondents had an unfavorable view of Musk in February, up from 34 percent in April 2022 when Musk disclosed his stake in Twitter.

“A modest but growing number of EV shoppers are increasingly put off by Elon Musk’s behavior and politics and are now finding viable alternatives to Tesla in the marketplace,” Ed Kim, president of California-based consultancy AutoPacific said.

That group includes Jonny Page, a London-based consultant who works with climate-focused startups and will purchase an EV this summer. It will not be a Tesla.

Page, 36, said his decision is partly because of concerns over Tesla safety but mostly about Musk’s “unhinged” behavior. “I don’t want to put a single penny in that man’s pockets,” Page said.

‘I can’t go back to gas’

Tesla’s reputation is still sterling with many.

Market researcher S&P Mobility shows Tesla has the highest loyalty among major car brands, with 68% of owners choosing another Tesla when they bought a new car last year.

READ: US aims to ensure local EV maker success as China boosts exports

Christian Cook, a Tesla Model 3 owner in Texas who identified as leaning right, said Musk’s actions made no difference and that he was “becoming numb to the shenanigans.”

Kat Beyer, a climate activist in Wisconsin, said she wanted to avoid Tesla because of Musk’s support for Republicans, but wound up buying a Model Y last year because of a lack of EVs with reliable charging infrastructure.

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“It’s hard to drive the car associated with him,” Beyer said. “But I can’t go back to gas.”

TAGS: Elon Musk, Market, Tesla

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