Musk's proximity to Trump is harshly calculated
The potential Tesla customer base is shrinking. Elon Musk's tarnished image as CEO is not entirely to blame, according to experts. However, Musk's "Right-wing positioning and Trumpification" is part of a long-term strategy.
Is the reputation ruined, it revives shamelessly. This sums up what Elon Musk has been practicing for years. He even has a hand in it, as they say, in keeping a chip on his shoulder. Musk's reputation means little to him; the Tesla CEO does and makes what he wants. Musk polarizes, and some see him as a brilliant visionary and businessman, while others simply see him as a spinner, with a penchant for impulsiveness and provocation. His surprising transformation from passionate Trump hater to Trump's best buddy and mega-donor fits perfectly into the picture.
The tech mogul plans to pump $45 million monthly into a fund for Trump's re-election. The open question is how this political proximity to Trump squares with the business of the carmaker. The customer base is shrinking. The Tesla brand long profited from Musk's declared fight against climate change through the promotion of electric mobility. The fact that deeply ingrained Democrats in the US might no longer want to be seen on the street with a Tesla or hesitate to buy one is at least plausible.
US studies from April show a clear connection between Musk's reputation and Tesla's shrinking sales in the US electric vehicle pioneer. According to the US market research firm Caliber, Tesla's "Consideration Score" - a metric that measures consumer interest in a brand - fell to 31 percent in February. The previous high was 70 percent in November 2021. Caliber CEO Shahar Silbershatz concluded from this that it was "very likely" that Musk's reputation was having a damaging effect on the company. Negative images of Musk, his brash management style, and the fuss around the social media platform X were identified as image-damaging.
The US consumer researchers at CivicScience blew the same horn. In February, according to their survey, 42 percent of respondents had an unfavorable image of Musk. In April 2022, it was still 34 percent. Ed Kim, President of the California consulting firm AutoPacific, comes to a similar conclusion as the Caliber CEO: "A modest but growing number of electric vehicle buyers are increasingly deterred by Elon Musk's behavior and politics and are now looking for practical alternatives to Tesla on the market."
Are Democrats Going on a Tesla Buycott?
Musk regularly generates negative headlines. The fact that he makes himself even less popular with his engagement for Trump's campaign among his potential customer base is not out of the question. However, Musk's image alone does not explain everything. A figurehead harms a brand not in the same way that its reputation deteriorates. Musk's behavior follows a clear strategy.
For many experts, Trump's support for Musk is not surprising and is even a smart investment for the future: "Joe Biden largely ignored Tesla during his tenure," says Jochen Stanzl from CMC Markets ntv.de. Musk's support for Trump could potentially be damaging, as it tends to put off progressive buyers who are strongly committed to environmental and sustainability issues. However, Musk could also win buyers from the other camp. Long-term, Musk's decision to support Trump could prove to be a strategic move for Tesla. The rising stock price at least does not indicate significant skepticism from investors regarding Tesla's future development.
Auto expert Ferdinand Dudenhoeffer also sees a long-term strategy behind Musk's support for Trump. "The millions for the Trump campaign are a 'Giga' bet. Musk is a player, he loves risk. Trump was never a friend of electric cars. He considers climate change to be propaganda. So Musk has to consider how he can make it in his important US market after the election on November 5."
It's not about "a few lousy dollars," the auto expert continues. "Musk doesn't care if he comes across as sympathetic or unsympathetic." What matters to him is that the topics of electromobility and Tesla remain at the top of the list in the race against the huge fossil fuel fraction in the US. "I think he'll manage to get Trump on his side." A few idealists who refuse to buy a Tesla because of Musk's political orientation are not a loss.
"Nobody bought or didn't buy a car because of Piech," says auto expert Dudenhoeffer. Outside the US, no rooster crows about Musk's political orientation. In the important Chinese market, buyers looked at the bare facts about the car. Frank Schwope, who teaches the automotive industry at the Fachhochschule des Mittelstands in Cologne and Hanover, agrees: "Quality and technological progress are more important than the opinion of a company CEO." What will determine future success is Tesla's ability to further develop its technology advantage, for example through Robo-Taxi, and protect the US market from Chinese e-car competition. Schwope also sees Musk's new Trump friendship - should his strategy succeed - as a clever move: "If Trump wins the election, he could massively support Musk in the next few years."
In the US state of New York, a traditional Democratic stronghold, the debate over Musk's large party donations is entirely bypassing reality, as US expert Sandra Navidi of BeyondGlobal describes on ntv.de. "In Manhattan, the number of Teslas is quite manageable. Tendentially, they are driven by Democrats and younger people. A few years ago, there was a hype here, but it has noticeably waned." New York politician Navidi refers to the chronic parking shortage and lack of charging stations. More important for the potential customer base is the quality of the cars, she says. "I've heard from pampered Manhattanites that they consider Tesla to be cheap plastic cars with low comfort. Those who are interested in electric cars want luxury and are therefore more open to the electric cars of Mercedes instead." In the weekend enclave of New Yorkers, the Hamptons on Long Island, you therefore see more luxury brands like Mercedes, BMW, and Land Rover.
The Tesla CEO has not been the first time to write headlines with a controversial political decision. In February, there was criticism for his Russia ties - behind that was a larger strategy suspected. Musk harms the brand on the one hand, but on the other hand, he wants to strengthen it. At the end of the day, Musk's tarnished image is not Tesla's biggest problem. Reality is much more complex, as a look at the market environment shows: high interest rates, expensive auto loans, delivery delays, trade war with China, catching up competition, and above all, the aging model range of the automaker - there are many reasons why the Tesla customer base is shrinking. To survive in the jumble, the proximity to a possible new US President Trump might be helpful. Musk put it neatly in November: "Whether you hate me, like me, or are indifferent, do you want the best car or don't you?" He didn't have politics on his side then, it could be difficult.
In the gathering storm of criticisms, Musk remains unphased. His politically charged decisions, such as his controversial ties with Russia and his support for Donald Trump's re-election campaign, have sparked controversy, but they are part of a larger strategy.
The unconventional moves of Elon Musk have not only affected his personal reputation but also Tesla's market position. The electric vehicle pioneer has seen a decline in its "Consideration Score" and a potential shrinking of its customer base due to Musk's political associations, according to US market research firms.
