Consumer interest is decreasing
How Musk’s Image Deters Potential Tesla Buyers
April 3, 2024, 7:48 p.m
There are several reasons why Tesla is seeing declining sales figures. One of them is likely to be company boss Musk. The controversial billionaire has been polarizing for months with all sorts of public statements. The popularity of the electric car manufacturer is declining – but not in every country.
Opinions differ when it comes to Tesla boss Elon Musk: some are fans of the busy businessman. The others are critical of the billionaire because of right-wing political comments and brutal management of his social media platform X. For a long time, this did not affect the success of the electric car pioneer from the USA.
But according to experts, that has changed. According to data from US market research Caliber, which was available to the Reuters news agency, Tesla’s “Consideration Score”, a key figure for measuring consumer interest in a brand, fell to 31 percent in February. Caliber recorded the highest level in November 2021 at 70 percent.
According to market researchers, there is also a strong connection between the image of Tesla and that of Musk. “It is very likely that Musk himself is contributing to the decline in reputation,” said Caliber boss Shahar Silbershatz. For four out of five Americans, Musk is Tesla’s figurehead. The car manufacturer did not respond to a request for comment.
In the US, a survey by consumer research Civicscience, seen exclusively by Reuters, found that 42 percent of respondents had an unfavorable view of Musk in February, up from 34 percent in April 2022, when Musk announced his stake in Twitter. “A modest but growing number of electric car buyers are increasingly turned off by Elon Musk’s behavior and policies and are now looking for viable alternatives to Tesla in the market,” said Ed Kim, president of California-based consulting firm Autopacific.
Country-specific differences
The fact that the potential Tesla buyer base is shrinking may also be due to the car manufacturer’s aging model range. According to Musk, the market environment for electric cars has also deteriorated due to high interest rates, which make loans to buy cars more expensive.
While Tesla alone lost eight percentage points in Caliber’s sentiment barometer in January, the values of the German premium manufacturers Audi, BMW and Mercedes-Benz in the USA improved to 44 to 47 percent. Despite further price cuts, Tesla’s sales fell in the first quarter for the first time in four years, contrary to market expectations, by 8.5 percent compared to the same period last year to just under 387,000 cars.
Consumer attitudes are developing differently regionally: in the USA, Canada, Great Britain, France and Sweden, popularity values have plummeted, according to data from market research Brand Finance. In Germany, where Tesla operates a factory in Grünheide near Berlin, and also in China, the car manufacturer gained popularity.
Musk’s distinctive personality benefited Tesla thanks to his declared fight against climate change by promoting electric mobility. The elegant, digitally sophisticated cars stood out as petrol guzzlers. Tesla rapidly developed from a niche manufacturer to a heavyweight and the most valuable car manufacturer in the world on the stock market. The company used to be able to save on expenses for advertising or press work because Musk, as boss, constantly caused a stir. In the meantime, that has changed.
“Do you want the best car or don’t you want the best car?”
His support for Republicans in the US and applause for anti-Semitic statements on X, from which Musk then distanced himself, are worrying financial market analysts about the company. In response to a question from an investor at the beginning of last year, Musk said, referring to his then 127 million followers on X, that he was “reasonably popular”. In November he stated: “Whether you hate me, like me or are indifferent, do you want the best car or don’t you want the best car?”
Tesla’s reputation is still excellent among many. The market research company S&P Mobility shows that Tesla has the highest loyalty among the major car brands: a good two thirds of Tesla owners remain loyal to the brand when they buy a new car. Christian Cook, a Texan who owns a Model 3 and describes himself as politically right-wing, says Musk’s actions make no difference. Personally, he doesn’t care about the “stupid” criticism.
Kat Beyer, a climate activist from Wisconsin, decided to buy a Model Y last year despite Musk. The reliable charging infrastructure was the deciding factor. “It’s hard to drive the car that’s associated with him,” Beyer said. “But I can’t go back to petrol.”