It’s safe to say that more people know who the CEO of Tesla is than could tell you who runs General Motors, Ford, Toyota, Volkswagen, or Hyundai. Elon Musk may own a lot of companies, but it’s Tesla that made him a household name. Not since Henry Ford and his Model T has the head of a car company been so associated with its wares. For many of the brand’s fans, veneration of Elon has gone hand in hand with veneration of Tesla, but what happens if people start thinking Elon is not so swell? Will they sour on Tesla’s products? We may be about to find out.
After his high-profile purchase of Twitter for $44 billion, Musk assumed control of the social-media giant and has made an almost daily series of controversial moves. He reinstated formerly banned accounts, attacked Dr. Anthony Fauci, retweeted QAnon memes, and spouted off about “woke mind virus.” Advocating for “free speech,” Musk has gutted Twitter’s content-moderation function, with the result being that hate speech has skyrocketed and advertisers have fled. Now, he says he’ll be stepping down as Twitter CEO, but it remains to be seen whether he actually steps away.
Wall Street, which has bestowed upon Tesla a sky-high valuation that has helped make Musk the planet’s richest man, has of late been tapping the brakes. Tesla’s stock price has been cut by 55 percent so far this year, and the selloff has accelerated since Musk’s takeover of Twitter.
Of course, many factors can affect the share price (among them, Musk himself selling nearly $40 billion worth of stock this year). But is Wall Street concerned specifically about Elon’s behavior? Interviewed on CNBC’s Squawk on the Street on Friday, Bernstein analyst Toni Sacconaghi said, “Absolutely, to some degree Musk may be disenfranchising potential customers.” Sacconaghi, whose firm has a $150 price target on the stock, saw bigger headwinds facing the company.
Some investors are voicing similar concerns. Quoted in the Wall Street Journal, Gary Black with Future Fund LLC, which is a major Tesla shareholder, said, “The $TSLA brand has been negatively impacted by the Twitter drama. Where before EV buyers were proud to drive their Teslas to their friends or show off Teslas in their driveways, now the Twitter controversy is hurting Tesla’s brand equity.” On Twitter, Black expressed hope that Elon would see the error of his ways: “He will realize soon (if not already) that his polarizing political views are hurting customer perceptions of [Tesla] EVs.”
A recent story in Forbes echoed this sentiment, as does a just-released report on automakers’ brand equity, by the automotive research consultancy Strategic Vision. Strategic Vision says, “Tesla’s brand image is heavily tied to its CEO, Elon Musk” and that Musk’s recent actions “all have had a direct impact on his own image and that of Twitter and Tesla.” Strategic Vision president Alexander Edwards notes: “These problems are magnified in that battery electric vehicles (BEVs) are more often purchased by self-identified Democrats who have generally opposed Musk’s actions with Twitter.”
Elon seems to be going out of his way to antagonize this core audience. And research shows Democrats’ view of Tesla has dimmed lately, while Republicans’ opinion of the brand has turned more favorable, although to a lesser degree.
“Tesla has offered among the best, if not the best, electric vehicles for over a decade, but these buyers aren’t necessarily making the choice based on how environmentally friendly it is,” counters Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. He adds: “An aura has grown around Tesla ownership. It shows the financially green status of the owner rather than their eco-green mindset, which doesn’t automatically equate to being left-leaning. Given Tesla’s popularity, its buyers will cover a wide political spectrum, and a portion will likely be offended by Musk’s opposing political views, but the numbers aren’t likely to put a huge dent in Tesla’s totals.”
Tesla, by and large, created modern EV demand. At one time, those who were turned off by Musk’s statements or behavior might nonetheless have overlooked them, owing to the dearth of EV alternatives. Today, though, Audi, BMW, Cadillac, Chevrolet, Ford, Genesis, GMC, Hyundai, Jaguar, Kia, Lexus, Lucid, Mercedes-Benz, Nissan, Polestar, Porsche, Rivian, Subaru, Toyota, Volkswagen, and Volvo all offer electrics, with legions more heading to the on-ramp. And all of them are from automakers whose CEOs keep their politics to themselves.
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Keyword: Will Elon Musk’s Political Rantings Drive Tesla into the Ditch?