The ranks of would-be Tesla buyers in the United States are shrinking, according to a survey by market intelligence firm Caliber published today by Reuters, which attributed the drop in part to CEO Elon Musk’s polarising persona.
While Tesla continued to post strong sales growth last year, helped by aggressive price cuts, the electric-vehicle maker is expected to report weak quarterly sales, as early as Tuesday (April 2).
Caliber’s “consideration score” for Tesla, provided exclusively to Reuters (see below), fell to 31% in February, less than half its high of 70% in November 2021 when it started tracking consumer interest in the brand.
Tesla’s consideration score fell 8 percentage points from January alone even as Caliber’s scores for Mercedes, BMW and Audi, which produce gas as well as EV models, inched up during that same period, reaching 44 to 47%.
Tesla did not respond to a request by Reuters for comment. Musk in the past has blamed high-interest rates for curbing consumer demand for big ticket items like cars.
Caliber cited strong associations between Tesla’s reputation and that of Musk for the scores.
“It’s very likely that Musk himself is contributing to the reputational downfall,” Caliber CEO Shahar Silbershatz told Reuters, saying his company’s survey shows 83% of Americans connect Musk with Tesla.
Reuters spoke to five marketing, polling and car experts who said controversies surrounding Musk’s increasingly right-wing politics and public statements are weighing on Tesla’s brand and demand.
“It is hard enough to win sales without getting into politics,” said Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management.
Economic fears, the lack of affordable new models and rising competition from cheaper rivals like China’s BYD have also been cited by Wall Street analysts as putting pressure on Tesla.
Overall electric vehicle sales in the U.S. are forecast to increase 15% in the first quarter of this year, according to estimates by researcher Cox Automotive. Tesla sales are projected to increase by 3%.
“The EV slowdown is shaping up to be a Tesla slowdown,” Cox analyst Stephanie Valdez Streaty said during a conference call Thursday.
New car registrations for Teslas in California– their biggest market in the U.S. – posted their first drop in over three years in the fourth quarter of 2023 even as EV sales rose overall.
At least five analysts cut Tesla’s target price 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 benefited Tesla as he promoted tackling climate change by reimagining cars as stylish, electric computers on wheels that could beat gasoline guzzlers in looks, performance and handling.
Tesla achieved breakneck annual sales growth for more than a decade.
In recent years, the billionaire courted controversy with comments and actions including his embrace of the Republican party and endorsement of anti-semitic comments on X. Musk has denied being anti-semitic.
When asked by an investor during a January 2023 conference call if 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 are indifferent, do you want the best car, or do you not want the best car?” Musk said at another event in November.
Brand valuation consultancy Brand Finance found Tesla’s reputation fell in 2023 in the United States, the Netherlands, France, United Kingdom, and Australia. Tesla’s reputation did not suffer in China, where access to news on the company and its CEO may have been limited, and Germany.
