Business

As Musk’s reputation declines, prospective Tesla customers shun the business

As Musk's reputation declines, prospective Tesla customers shun the business
GRUENHEIDE, GERMANY – MARCH 13: CEO of Tesla Elon Musk gets in a car as he leaves the Tesla Gigafactory on March 13, 2024 near Gruenheide, Germany. Musk is visiting the plant following an arson attack on March 4 on a nearby power transmission tower that left the factory without electricity until March 11. A leftist activists group called “Vulkan Group” (“Vulkangruppe”) has taken responsibility for the attack. (Photo by Maja Hitij/Getty Images)

According to a survey by market research firm Caliber, there are less people in the US who would like to own a Tesla. The survey attributes this decline in part to the divisive image of CEO Elon Musk.

Despite dramatic price reductions that helped Tesla maintain robust sales growth last year, the electric vehicle manufacturer is set to report dismal quarterly sales and opens a new page as early as Tuesday.

Caliber’s “consideration score” (opens new tab) for Tesla, which was made available only to Reuters, dropped to 31% in February from a peak of 70% in November 2021, the month it began monitoring customer interest in the brand.

Tesla’s consideration score decreased by 8 percentage points from January alone, despite the fact that Caliber’s ratings for gas-powered and electric vehicle manufacturers Mercedes (MBGn.DE), BMW (BMWG.DE), and Audi (44–47%) all increased during that time.

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An inquiry for comment from Tesla was not answered. In the past, Musk has attributed the decline in customer demand for expensive goods like cars to high borrowing rates.

Caliber attributed the results to substantial correlations between Musk’s and Tesla’s reputations.

According to Caliber CEO Shahar Silbershatz’s company’s survey, 83% of Americans associate Musk with Tesla, thus “it’s very likely that Musk himself is contributing to the reputational downfall,” he told Reuters.

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According to five marketing, polling, and automotive experts contacted by Reuters, Tesla’s demand and brand are being negatively impacted by the scandals surrounding Musk’s increasingly right-wing public pronouncements and politics.

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

Wall Street analysts have also noted that Tesla is under pressure from growing competition from less expensive rivals like China’s BYD, economic concerns, and a dearth of new, reasonably priced models.

According to projections by researcher Cox Automotive, overall sales of electric vehicles in the United States are expected to rise by 15% in the first quarter of this year. Sales of Tesla vehicles are expected to rise by 3%.

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

Despite an increase in total EV sales, new car registrations for Teslas in California, their largest market in the United States, saw a decline for the first time in more than three years in the fourth quarter of 2023.

Last month, at least five analysts lowered their target price for Tesla, citing the possibility that the company will report underwhelming first-quarter delivery figures. As of now, shares of Tesla have dropped by around 30%.

Tesla profited from Musk’s flamboyant attitude as he advocated for combating climate change by rethinking automobiles as chic, electric computers that could outperform gas-guzzlers in terms of handling, performance, and appearance.

For almost ten years, Tesla saw yearly sales growth that was unprecedented.

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TRIBAL DISPUTES

The billionaire has courted controversy in recent years with remarks and deeds including his support of anti-Semitic remarks on X and his affiliation with the Republican party. Musk refutes allegations of anti-Semitism.

When an investor questioned Musk about whether his political remarks were harming Tesla’s sales and brand during a January 2023 conference call, Musk responded that he was “reasonably popular,” citing his 127 million followers on X, the platform that was 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?” remarked Musk during a different November event.

According to brand valuation firm Brand Finance, Tesla’s standing declined in 2023 and that it has opened new accounts in the US, the UK, Australia, the Netherlands, and France. In Germany and China, where news about the firm and its CEO may not have been widely available, Tesla’s reputation held steady.

According to a study conducted in the United States by consumer analytics company CivicScience, opens new tab revealed exclusively to Reuters, 42% of respondents thought poorly of Musk in February, up from 34% in April 2022 when Musk revealed his ownership position in Twitter.

According to Ed Kim, president of California-based consultant AutoPacific, “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.”

Among them is Jonny Page, a consultant with a headquarters in London who works with climate-focused businesses and is planning to buy an electric vehicle this summer. No, it won’t be a Tesla.

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Page, 36, stated that Musk’s “unhinged” behavior is the main reason for his decision, while safety concerns regarding Tesla also play a part. “I don’t want to put a single penny in that man’s pockets,” Page responded.

“I CAN’T GO BACK TO GAS”

For many people, Tesla’s reputation remains impeccable.

Among the big automakers, Tesla has the highest level of brand loyalty, according to market research firm S&P Mobility, with 68% of owners selecting a different Tesla when they purchased a new vehicle last year.

Christian Cook, a Texas-based Tesla Model 3 owner who leans conservative, claimed he was “becoming numb to the shenanigans” and that his actions had no impact.

Wisconsin climate activist Kat Beyer said that she was hesitant to purchase a Tesla due to Elon Musk’s backing of Republicans, but she ultimately did so last year due to the dearth of EVs with dependable charging infrastructure.

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

Editing by Peter Henderson and Suzanne Goldenberg; Additional reporting by Joe White in Detroit and Stella Qiu in Sydney; Reporting by Hyunjoo Jin in San Francisco and Nick Carey in London

 

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