Potential Tesla buyers view the company negatively as Musk’s reputation declines: survey
Elon Musk Tesla | Photo: Bloomberg
The number of potential Tesla buyers in the United States is shrinking, according to a survey by market research firm Caliber, which attributed the decline in part to CEO Elon Musk’s polarizing personality.
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% in February, less than half of its high of 70% in November 2021, as it began tracking consumer interest in the brand.
Tesla’s consideration score fell 8 percentage points in January alone, while Caliber’s scores for Mercedes, BMW and Audi, which produce both gasoline and EV models, rose during the same period, reaching 44-47%.
Tesla did not respond to a request for comment. Musk has in the past blamed high interest rates for reducing consumer demand for expensive items like cars.
Caliber cited strong associations between Tesla’s reputation and that of Musk for the scores.
“It is very likely that Musk himself is contributing to the reputational damage,” Caliber CEO Shahar Silbershatz told Reuters. His company’s research shows that 83% of Americans associate Musk with Tesla.
Reuters spoke to five marketing, polling and automotive experts who said the controversies surrounding Musk’s increasingly right-wing politics and public statements are weighing on Tesla’s brand and demand.
“It’s hard enough to generate revenue without getting into politics,” says Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management.
Economic fears, the lack of affordable new models and increasing competition from cheaper rivals such as China’s BYD are also cited by Wall Street analysts as putting pressure on Tesla.
According to estimates from researcher Cox Automotive, overall sales of electric vehicles in the US are expected to increase by 15% in the first quarter of this year. Tesla sales are expected to rise 3%.
“The EV slowdown is starting to become a Tesla slowdown,” Cox analyst Stephanie Valdez Streaty said on a conference call Thursday.
New car registrations for Teslas in California – their largest US market – posted their first decline in more than three years in the fourth quarter of 2023, while electric vehicle sales overall rose.
At least five analysts cut Tesla’s target price last month, saying the automaker could post disappointing first-quarter results. Shares of Tesla are down nearly 30% so far this year.
Musk’s outsized personality benefited Tesla as he promoted tackling climate change by reinventing cars as stylish, electric computers on wheels that could beat gas guzzlers in looks, performance and handling.
Tesla achieved breakneck annual sales growth for more than ten years.
INCREASED CONTROVERSY
In recent years, the billionaire has courted controversy with comments and actions, including his embrace of the Republican party and his endorsement of anti-Semitic comments about X. Musk has denied being anti-Semitic.
When asked by an investor during a January 2023 conference call whether his political comments were hurting Tesla’s brand and sales, Musk said he was “fairly popular,” referring to his then 127 million followers on X, formerly known like Twitter.
“Whether you hate me, like me or are indifferent, do you want the best car or don’t you want the best car?” Musk said this at another event in November.
Brand valuation consultancy Brand Finance found that Tesla’s reputation declined in 2023 in the United States, the Netherlands, France, the United Kingdom and Australia. Tesla’s reputation has not suffered in China, where access to news about the company and its CEO may have been limited, and in Germany.
In the US, a survey by consumer analytics firm CivicScience, shown exclusively to Reuters, found that 42% of respondents had an unfavorable view of Musk in February, up from 34% in April 2022 when Musk announced his stake in Twitter.
“A modest but growing number of EV shoppers are increasingly turned off by Elon Musk’s behavior and politics and are now finding viable alternatives to Tesla in the marketplace,” said Ed Kim, president of California-based consulting firm AutoPacific.
That group also includes Jonny Page, a London-based consultant who works with climate-focused startups and will be purchasing an EV this summer. It won’t be a Tesla.
Page, 36, said his decision was partly due to concerns about Tesla’s safety, but mainly due to Musk’s “unhinged” behavior.
“I don’t want to put a dime in that man’s pockets,” Page said.
“I CAN’T GO BACK TO GAS”
Tesla’s reputation is still good among many.
Market researcher S&P Mobility shows that Tesla has the highest loyalty among major car brands: 68% of owners chose another Tesla when they bought a new car last year.
Right-leaning Tesla Model 3 owner Christian Cook in Texas said Musk’s actions made no difference and he became “numb to the pranks.” Kat Beyer, a climate activist from Wisconsin, said she wanted to avoid Tesla because of Musk’s support of Republicans, but ended up buying a Model Y last year due to a lack of electric cars with reliable charging infrastructure.
“It’s hard to drive the car associated with him,” Beyer said. “But I can’t get gas anymore.”
First print: April 2, 2024 | 12:05 pm IST