How Musk’s Shift to Right-Wing Politics Could Deter Car Buyers and Impact Tesla’s Stock Performance

NEW YORK (AP) — Each year, Tesla must tell its investors about potential risks. This year’s report mentions everything from lawsuits to battery fires and even global crises like war and pandemics. Yet, it barely touches on Elon Musk’s increasing involvement in right-wing politics, which some say could turn off potential buyers.

“It’s simple marketing: stay out of politics,” says brand consultant Robert Passikoff. “Otherwise, you could lose customers.” And it might be too late for Tesla to recover.

Sales in Europe dropped by 45% in January, even as electric vehicle sales generally increased. This follows a report of declining sales in California, Tesla’s largest U.S. market, and marked the first annual sales drop globally for the company last year.

Model 3 owner John Parnell, a Democrat from California, stated, “I don’t even want to drive it anymore.” He also canceled his order for the Cybertruck, losing a $100 deposit. “He’s ruining the brand with his politics.”

Analysts suggest it’s early to pin these sales issues solely on Musk. The Model Y, Tesla’s top seller, is set for a new version later this year, likely causing some buyers to hold off. Plus, competitors in Europe and China are catching up, offering EVs with strong battery life and reliability.

But analysts caution that Musk’s political statements could be making things worse. “Musk seems to believe his words won’t impact Tesla’s success,” notes Morningstar analyst Seth Goldstein. “Tesla used to be in a prime position, but now it faces real competition.”

Sales plummeted significantly in Germany and France, down roughly 60% in January alone. Sales in France dropped another 26% in February. As for the Model 3, its sales fell by 33% in Europe, despite no updates that would make buyers want to wait.

Felipe Munoz, an analyst at Jato Dynamics, acknowledges the shifting sentiment. “Some people are unhappy with his political views and activism,” he says, reflecting on what began as a threat of boycotts but is now a growing concern.

Tesla used to attract a wealthy, environmentally conscious clientele who supported Musk’s vision for a cleaner planet. That seems to be changing.

In a recent interview, Musk acknowledged, “I used to be adored by the left… not so much these days.” His investment of $270 million in Donald Trump’s campaign and backing Trump’s government initiatives has raised eyebrows. On top of that, he has made controversial statements regarding various political topics, including supporting far-right groups in Europe.

Protests against Tesla have surged, with demonstrations at showrooms and even vandalism. Effigies of Musk have appeared in Europe, alongside critical slogans on bumper stickers. Some Tesla owners, like Jens Fischer from Germany, have expressed their discontent, saying, “I will not buy a Tesla again” due to Musk’s divisive politics.

Tesla investor Ross Gerber believes Musk has combined a top-quality product with poor marketing. “People want to feel good about their purchases, and they prefer to avoid politics,” he explains. “Especially with such controversial issues at play.”

While some boycotts tend to lose steam, Goldstein points out that buying a car is a significant financial decision, making thorough boycotts less likely. However, not everyone is ready to give up their Teslas. Londoner Harry Chathli is one such owner, calling Musk a visionary who has reshaped transportation.

Yet, if Tesla’s falling stock serves as any indicator, the company faces uncertainty. Since Inauguration Day, the stock has plummeted by 37%, amounting to a staggering loss of $550 billion in investor wealth.

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