Is Tesla undergoing ‘unprecedented brand damage’ because of Musk?

Jeremy Clarkson, the ex-Top Gear host, who is a strong advocate for a political rhetoric that can best be described as “libertarian conservatism” with a particular dislike of progressivism, often humorously mocked the existence of the Toyota Prius and the brand’s tree-hugger owners for daring to choose to buy a car that “lacked personality because it didn’t make a noise”.

For people like Clarkson, EVs are a symbol of everything that’s wrong with the world; a new technology-driven future, far removed from the world of old power and mechanical industrialisation, where they somehow feel they don’t belong.

According to those intent on weaponising the growing demand for new energy vehicles, NEVs are a compelling alternative for the “woke” class: left-leaning, lentil-eating socialists who are dumb enough to believe that human-influenced climate change exists, and that advanced battery technology may hold some credible promise to alleviate it.

For the lentil lovers, Tesla has always been the darling of the category – its common stock seen by many as a proxy for the future of car manufacturing in America. And until recently, its target market in the United States would have been the aforementioned “woke” class, who can also be plausibly classified as voting for the Democrats.

Musk effect

Ironically, it is once again politics, particularly the politics of the Tesla CEO, Elon Musk, that is now supposedly at the heart of what many are calling the “unprecedented brand damage” of Tesla.

Following Elon Musk’s recent “close involvement” with President Donald Trump’s radical realigning of US politics, a spontaneous eruption of vitriol in the form of derogatory memes and satire targeted against Musk has seemingly reshaped public perception of the Tesla brand online.

Tesla owners are said to be selling their cars in fear of being targeted by an increasing number of banner-waving protesters, some of whom have taken their anger as far as to set fire to dealerships and deface vehicles with baseball bats and spray paint.

Financial experts have suggested that Tesla’s alarming slump in vehicle sales, particularly in Europe, and a 34% decline in the Tesla stock price can be directly linked to Musk’s preference for right-leaning political ideology.

Almost everyone else is taking the Tesla struggles a step further by proclaiming that Musk “is causing substantial long-term reputational damage” that is sure to orient the forward trajectory of the business into a reinforcing death spiral of weakness.

Are would-be Tesla buyers genuinely spooked by a chainsaw-wielding company CEO with a propensity to publicly enact a questionable salute now and again?

As Oscar Wilde famously said, “There is only one thing in life worse than being talked about, and that is not being talked about.”

Or, as the old marketing trope suggests, “there is no such thing as bad publicity”, and evidence shows that in most cases, the saying is true.

Intrinsic value

There are a few notable instances, for example the 2023 Bud Light controversy, where brands have experienced lower sales volumes in the short term because of a coordinated boycott against them. But over a longer time horizon, these brands were still able to maintain their intrinsic value despite the negative coverage.

In short, the reason that bad publicity isn’t necessarily a bad thing is quite simple: most people really don’t care about brands that much for it to be a cataclysmic deal breaker.

Very few people take the time out from their busy schedules of picking the kids up from school, or worrying about how they are going to make ends meet at the end of the month, to seriously consider whether their personal values perfectly align with those of Coca Cola.

Nobody drives a VW and worries that the brand was originally founded by the Nazis in 1934.

South Africans rightfully worry about the return of load shedding because of poor service from Eskom, but completely overlook the fact that the company is globally recognised as the world’s leading emitter of sulphur dioxide.

And even when a shameful indiscretion that is closely associated with a well-known brand makes headline news, what ends up sticking in our minds long afterwards are not the specific details of the incident, but the mental awareness of the brand itself.

Most consumers choose to purchase brands that (1) are easily available in the moment they need them; (2) do the job that they need done; (3) are within the budget they can afford; and (4) are well known to them.

Other reasons for Tesla struggles

Besides Elon Musk, Tesla is facing a plethora of challenges that are affecting the company’s financial performance. Some of them include:

• The number of EV competitors in the category has increased substantially in the past year, making dominance of the marketplace extremely difficult;


• Tesla is in the process of rolling out the new Model Y, which is causing a lot of customers to hold off on buying a Tesla before the new car is available; and


•  Tesla sales in Europe have been in decline since last year, but this is not the case in the UK. This anomaly might be because Tesla has an oversupply of right-hand drive Model Y cars, which they are trying to offload by selling the cars for far cheaper in the UK.

The point is that sales numbers and stock prices are affected by a complex array of factors, and just because there is some negative publicity linked to the CEO doesn’t automatically mean that the Tesla brand is now in terminal decline and that the company as a commercial prospect is doomed.

In the same way that it is overly simplistic and misleading to continue to assume that electric vehicles only appeal to lefties and hippies (they’re now pretty mainstream in most developed markets), it’s also misguided to think that Elon Musk’s antics alone are causing “unprecedented brand damage” for Tesla.

These extreme statements make for eye-catching headlines, but damaging a popular brand is not that easy. DM