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The drop in loyalty rate for Tesla owners in blue states resulted in Tesla losing about a percentage point of market share in those states, which includes some of the nation’s biggest car markets, such as California.
A poll last month by Morning Consult that shows that nearly 32% of US buyers “would not consider” buying a Tesla. That’s up from 27% in a Morning Consult survey a year ago, and only 17% when it asked the question in in February 2021.
By comparison, only 16% of potential buyers were almost certain or very likely to look at a Tesla before buying in the most recent survey, a figure that hasn’t changed much over the last four years.
Tesla’s once-soaring stock has taken a dramatic nosedive, reversing the post-election surge that had investors betting on Elon Musk’s influence within the Trump administration. This reversal isn’t merely a market correction; it’s a reflection of growing anxieties surrounding Musk’s increasingly visible and controversial role in government, coupled with Tesla’s own mounting sales challenges.
Following the election, Tesla’s shares surged by 84%, fueled by expectations that Musk, a major Trump supporter, would wield significant influence. However, his appointment as head of the Department of Government Efficiency (DOGE) transformed him from a perceived behind-the-scenes advisor to a highly polarizing figure. The deep spending cuts and federal worker layoffs enacted under his leadership have ignited public backlash, contributing to a 40% drop in Tesla’s stock from its peak, effectively erasing 87% of its post-election gains.
This political fallout isn’t the only factor impacting Tesla’s performance. The company is also facing fierce competition, particularly from Chinese automakers making significant strides in global markets. Simultaneously, Tesla’s sales figures reveal a concerning trend. In Europe, sales plummeted 50% in January, despite overall electric vehicle sales rising. In China, a crucial market, sales dropped 29% in the first two months of the year. Even in the U.S., a 16% decline was observed between December and January. These figures, while partially influenced by seasonal fluctuations, indicate a deeper issue: a potential decline in consumer demand.
The question of how much of Tesla’s decline is attributable to Musk’s political profile is central to the debate. Public sentiment has clearly shifted, with protests outside Tesla stores, reports of vandalism, and declining customer loyalty in traditionally supportive “blue states.” Polls indicate a growing number of potential buyers are now hesitant to consider Tesla, suggesting a direct correlation between Musk’s political involvement and brand perception.
Furthermore, concerns persist that Musk’s government role is diverting his focus from Tesla’s core business. While his ties to the Trump administration could potentially expedite approvals for initiatives like self-driving “robotaxis,” the reality is that Tesla’s promises of full autonomy remain largely unrealized. Despite bold claims, the technology is still under development, and competitors are already offering similar services.
Despite these challenges, some investors remain optimistic, believing the current stock decline presents a buying opportunity based on the potential of Tesla’s autonomous driving technology. They see Musk’s influence as a potential catalyst for regulatory approvals, accelerating the rollout of robotaxis.
However, skeptics argue that Musk’s promises have consistently fallen short, and that the company’s sales woes and intensifying competition pose significant threats. The upcoming first-quarter sales figures, coupled with the progress of Tesla’s autonomous driving initiatives, will ultimately determine the company’s future.
