Musk's embrace of right-wing politics risks turning off car buyers and sinking Tesla's stock
NEW YORK (AP) — Elon Musk's car company is required each year to report to investors all the bad things that could happen to it, and the latest version lists every imaginable threat from costly lawsuits to out-of-control battery fires to war and another epidemic.
But there’s barely any mention in the latest annual update of Musk’s full-bore entry into right-wing politics, which some experts say is turning off potential customers who don’t share his views.
“It's marketing 101: Don’t involve yourself in politics,” said New York brand consultant Robert Passikoff. “People will stop buying your products.”
It may be too late.
Tesla sales plunged 45% in Europe in January, according to research firm Jato Dynamics, even as overall electric vehicle sales rose. That comes after a report of falling sales in California, its biggest U.S. market, and the first annual drop globally for the company last year.
“I don’t even want to drive it,” said Model 3 owner John Parnell, a Democrat from Ross, California, adding that he also is cancelling his order for the company's Cybertruck, losing a $100 deposit. “He's destroying the brand with his politics.”
Car industry analysts say it's too early to say for sure how much damage Musk is causing to Tesla because so many other factors could explain its current troubles. It's best selling vehicle, the Model Y, is coming out with a new version this year, leading potential Tesla buyers to hold off purchases right now. And European and Chinese manufacturers are finally catching up to the world's EV leader, offering cars with battery life and dependability that are competitive.
But, if anything, that makes Musk’s political comments even more reckless, auto analysts say.
“Musk thinks he can say anything he wants to and doesn’t think Tesla will suffer any consequences,“ said Morningstar analyst Seth Goldstein. “Tesla was in the sweet spot. Now it has competition.”
The sales numbers were particularly bad in Germany and France in January, down roughly 60% each, more than the average decline for the more than two-dozen European countries surveyed. Sales in France fell another 26% in February.
More worrisome was the breakdown for Tesla’s individual models. Sales of Tesla’s Model 3 dropped 33% across all European countries even though that car is not being updated and there is no reason for buyers to wait
“Part of the population is not happy with his views, his political activism,” said Jato senior analyst Felipe Munoz who had shrugged off the boycott threat earlier this year, but is now having second thoughts.
Many Tesla buyers used to be wealthy, environmentally-conscious professionals, often liberal, who were attracted to Musk's talk about how his EVs could help save the planet from fossil-fuel destruction.
Not anymore.
“I used to be adored by the left,” Musk said in an interview with Tucker Carlson on February 18 as his stock was halfway through a nearly 30% plunge for the month. “Less so these days.”
His decision to spend $270 million on Donald Trump's presidential campaign and publicly back him was risky enough for his business. Then he doubled down, pursuing a slash-and-burn strategy as head of Trump's government efficiency team and taking his political revolution and incendiary talk abroad.
He has backed the far-right, pro-Russian, anti-Muslim party in German y, called the British p rime minister an “evil tyrant” who runs a “police state," and stated recently about a U.S. neighbor and major Tesla market, “Canada is not a real country."
The backlash has been fierce.
Tesla showrooms in the U.S. have been besieged by protesters, its vehicles vandalized and bumper stickers appearing on its cars with sayings such as, “I bought it before Elon went nuts.”
An effigy of Musk was hung in Milan and image of him doing a straight-arm salute projected on a Tesla factory outside Berlin. In London, a bus stop poster of him above the word “swasticars” lit up social media. A Polish government minister called for a Tesla boycott.
“I will not buy a Tesla again," said Jens Fischer, a 50-year-old microscope salesman in Witten, Germany, who thinks Musk is “destabilizing democracy” and has slapped one of those “Elon went nuts” stickers on his Model 3. “I’d sell if I got a good offer.”
Tesla investor Ross Gerber says Musk has somehow managed to marry the world's best product with the world's worst marketing.
“People want to buy stuff that makes them feel good, you don't want politics involved," said Gerber, a money manager whose portfolios hold nearly $60 million in Tesla stock. “It's even worse when you have such divisive issues, whether it’s firing climate scientists or taking aid away from starving African children.”
Boycotts have a habit of fizzling out, and Morningstar's Goldstein says that buying a car is too big a decision and costs too much to make them successful targets, anyway.
One Tesla owner, Londoner Harry Chathli, is unmoved by the backlash, saying he has no intention of getting rid of his Tesla S. He has nothing but praise for Musk who he calls a visionary for transforming "the way we think about transportation and the future of our planet.”
But if Tesla's stock is any indicator, the company's prospects are deteriorating, and Musk's position in the Trump administration isn't helping. As of Friday, it has dropped 37% since its Inauguration Day, a loss of $550 billion in investor wealth.
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AP Business Writers Pan Pylas in London and David McHugh in Frankfurt contributed to this story.
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