Elon Musk is never one to shy away from a political battle, using the social media platform he owns to voice everything from disdain at the Biden administration to amplifying anti-Semitic tweets. And that’s turned off a group of car buyers who don’t want to be associated with the Tesla CEO’s polarizing antics at a time when the electric-vehicle maker can’t afford to lose any customers.
Democrats are a large portion of Tesla buyers. For model years 2022 and 2023, they composed a solid 40% of sales, according to research firm Strategic Vision’s New Vehicle Experience Study, which surveys 250,000 buyers, and as first reported by the Wall Street Journal. But that fell to 15% at the beginning of the 2024 model year, which started in October and November of last year. Meanwhile, the share of buyers identifying as Republicans saw a slight bump during that time frame, from 29% in 2022 to 32% in October and November 2023, while sales among Independents rose even more, from 28% to 44%.
As Strategic Vision president Alexander Edwards notes, this was around the time Musk came under serious fire for a variety of comments made on X, including promoting an anti-Semitic tweet and lashing out at companies that pulled ads from the social media site. (Musk later backtracked on the anti-Semitic tweet, and visited Israel and Auschwitz.)
To replace Tesla, Democrats stuck with EVs and hybrids, but transitioned to the likes of the Cadillac Lyriq, Hyundai Ioniq 6 EV and Santa Fe hybrid, and Mercedes-Benz EQE SUV, per Strategic Vision’s survey.
That there are so many other options now is part of Musk’s problem, as is a broader slowdown in the market. Tesla, once the only serious player in the EV space, finds itself at something of a crossroads: Sales fell globally in the first quarter of this year, and later this week the company is expected to announce its worst quarterly results in seven years. The stock price is sinking, and Musk recently told staff the company will cut over 10% of its global workforce, some 14,000 employees.
Investors are losing faith, in part worried that Musk’s many other commitments, including his foray into politics, are distracting him from successfully leading the company. His “flippant” attitude is also an issue, Wedbush analysts wrote in a recent note. (Tesla didn’t immediately respond to a request for comment.)
“Musk is Tesla, and Tesla is Musk,” Wedbush’s Dan Ives told Fortune’s Paolo Confino. “But you need a committed CEO that’s going to handhold investors through this black cloud storm.”
The politics of consumerism
Musk might be Tesla, but there is an inherent tension in an “anti-woke” crusader leading a company that produces electric vehicles. His über-public shift to the right comes at the same time EVs have become a focal point of derision for many Republicans in a heated campaign season. “They have become a political football,” Ford CEO Jim Farley recently acknowledged.
Democrats still make up a much larger segment of EV buyers generally, according to Strategic Vision, and, luckily for Tesla, the dip was short-lived. Edwards notes that in the past six months, Democrats “have mostly returned” to the company, with the proportion of vehicles being sold to Democrats rebounding to 35% as of March—once again exceeding the percentage of those sold to Republicans or Independents.
“They want to support EV sales, and the price for a Tesla today is often too good to pass up,” Edwards said in an email. While it likely helps that Musk has spent less time in the spotlight recently, the fracas does highlight the dangers of an overtly political CEO espousing views unaligned with a firm’s largest customer segment. Noted Edwards: “Don’t make EVs political if you want them to succeed with the consumer.”
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