Vehicles for sale at a Tesla store in Vallejo, California, United States, Thursday, March 2, 2023.
David Paul Morris | Bloomberg | Getty Images
The ranks of the aspirants Tesla shoppers in the U.S. are declining, according to a survey by market intelligence firm Caliber, which blamed the decline in part on CEO Elon Muskhe is the polarizing character.
While Tesla continued to post strong sales growth last year, aided 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 its high of 70% in November 2021, when it began tracking consumer interest in the brand .
Tesla’s consideration score dropped 8 percentage points in January alone, even as Caliber scores for Mercedes, BMW and Audi, which make gasoline-powered models and electric vehicles, increased 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 curbing consumer demand for big-ticket items such as cars.
Caliber cited strong associations between Tesla’s and Musk’s reputations for scores.
“It is very likely that Musk himself is contributing to the reputational collapse,” Caliber CEO Shahar Silbershatz told Reuters, saying his company’s poll shows 83% of Americans link Musk to Tesla.
Reuters spoke to five marketing, polling and auto experts who said controversies over Musk’s increasingly right-wing policies and public statements are weighing on Tesla’s brand and demand.
“It’s hard enough to get sales without getting into politics,” said Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management.
Economic fears, a lack of new affordable models and growing competition from cheaper rivals such as China’s BYD have been cited by Wall Street analysts as factors putting pressure on Tesla.
Overall U.S. EV sales will increase 15% in the first quarter of this year, researcher Cox Automotive estimates. Tesla sales are expected to increase 3%.
“The EV slowdown is shaping up to be a Tesla slowdown,” Cox analyst Stephanie Valdez Streaty said on a conference call Thursday.
New Tesla car registrations in California – their largest market in the United States – saw their first decline in more than three years in the fourth quarter of 2023, even as electric vehicle sales increased overall.
At least five analysts cut Tesla’s price target last month, saying the automaker could post disappointing first-quarter delivery results. Tesla shares are down nearly 30% year to date.
Musk’s outsized personality has benefited Tesla as it has promoted the fight against climate change by reinventing cars as sleek electric computers on wheels that could beat gas guzzlers in terms of looks, performance and handling.
Tesla has achieved meteoric growth in annual sales for more than a decade.
Courted controversy
In recent years, the billionaire has courted controversy with comments and actions, including his support of the Republican Party and support for anti-Semitic comments on X. Musk has denied being anti-Semitic.
When asked by an investor on a January 2023 conference call whether his political comments were hurting Tesla’s brand and sales, Musk said he was “reasonably popular,” referring to his then 127 million followers on X, formerly known as Twitter .
“Whether you hate me, like me, or don’t care, do you want the best car or don’t you want the best car?” Musk said at another event in November.
Brand valuation consultancy Brand Finance found that Tesla’s reputation declined in 2023 in the US, Netherlands, France, UK and Australia. Tesla’s reputation did not suffer in China, where access to news about the company and its CEO may have been limited, and in Germany.
In the United States, a poll by consumer analytics firm CivicScience shown exclusively to Reuters found that 42% of respondents had an unfavorable opinion of Musk in February, compared to 34% in April 2022, when Musk revealed the his stake in Twitter.
“A modest but growing number of electric vehicle buyers are increasingly put off by Elon Musk’s behavior and policies and are now finding viable alternatives to Tesla in the market,” said Ed Kim, president of California-based consultancy AutoPacific.
That group includes Jonny Page, a London-based consultant who works with climate-focused startups and will buy an electric vehicle this summer. It won’t be a Tesla.
Page, 36, said his decision was partly due to Tesla’s safety concerns, but mostly Musk’s “upsetting” behavior. “I don’t want to put a single penny in that man’s pocket,” Page said.
“I can’t get gas again”
Tesla’s reputation is still great for many.
Market researcher S&P Mobility shows that Tesla has the highest loyalty among major auto brands, with 68% of owners choosing another Tesla when purchasing a new car last year.
Christian Cook, a Tesla Model 3 owner in Texas who identified himself as right-leaning, said Musk’s actions made no difference and that he was “becoming numb to the shenanigans.”
Kat Beyer, a climate activist from Wisconsin, said she wanted to avoid Tesla because of Musk’s support for Republicans, but ended up buying a Model Y last year because of the lack of electric vehicles with reliable charging infrastructure.
“It’s difficult to drive the car associated with him,” Beyer said. “But I can’t go back to gas.”