CEO Musk Catches Blame for “Plummeting” Interest in Tesla Products

With his Chevrolet Bolt showing signs of age, David Assemany recently started looking for a trade-in and “considered a Tesla for my next car.” That was, however, before the purchase of Twitter made Tesla CEO Elon Musk the object of daily headlines — and plenty of controversy.

“The Twitter deal brought his politics into sight,” said the suburban Detroit retiree, “and now I would never consider a Tesla.”

Assemany isn’t alone. TheDetroitBureau.com has spoken to a number of motorists who either own or intend to buy an EV who expressed reservations about purchasing a Tesla because of Musk’s increasingly vocal political comments, as well as his controversial actions following the Twitter takeover. And while these may be dismissed as anecdotal evidence, there’s a growing body of data raising concerns Musk could be turning into a liability for the EV company.

“Considerations” of Tesla products “plummeted”

The newly released Brand Watch study by Kelley Blue Book indicates shopper interest — “consideration” of the brand in industry-speak — “plummeted” during the third quarter. That coincides with the period when Musk’s controversial bid to acquire Tesla received constant news coverage, as did his increasingly conservative political comments on Twitter and in other media.

“Shopping consideration for the Model 3 sedan declined by 10% from the second quarter, and the Tesla Model Y and Model S both fell off the Top 10 most-shopped luxury vehicle list for the first time in two years,” KBB said in an analysis of the Q3 Brand Watch study. While Tesla, as a whole, remains among the top 10 brands covered by the study, it suffered “notably the largest quarter-over-quarter loss for any luxury brand.”

Exactly why consideration of Tesla slipped is a matter of ongoing debate, with KBB stressing it “could have been caused by a number of factors.”

There could be “further problems down the road”

Mike Darrow, president and CEO of auto research and shopping service TrueCar, agreed. During an interview at the LA Auto Show, Darrow pointed to all the new EVs making a debut at the annual event, including the Hyundai EV6 and VinFast’s VF 6 and VF 7 models. At the end of the 2021 model year there were about 15 long-range EVs available in the U.S. That is expected to reach around 50 by the end of this calendar year, TheDetroitBureau.com previously reported.

But Darrow said there is a strong possibility the ongoing controversies surrounding Musk has had “probably some” impact on Tesla, especially when it comes to winning over all the new EV buyers now coming to market. Overall consideration of electric vehicles has surged this year, rising from 52% of American motorists in March to 59% in August, according to TrueCar data. Meanwhile, EV sales rose by about two-thirds during the first 10 months of this year compared to the same period in 2022.

If new buyers turn off to Tesla that could stunt its long-term growth, said Darrow. But an equally significant concern is the possibility that current owners might decide to go elsewhere when it’s time to trade in.

“If he elevates these issues, it’s going to be a problem further down the road,” said Darrow.

Tesla sales rose — but still fell short of expectations

That’s a concern that a number of industry insiders raised during conversations with TheDetroitBureau.com at the LA Auto Show — though Darrow was one of the few to go on the record.

One, a senior analyst with another research firm, said it “makes no sense” to be attacking the politics of potential customers. And that’s all the more a problem since Musk has taken an increasingly conservative public stance. He has openly attacked President Joe Biden and derided many Democrats as “extremists.” But research says this runs counter to the generally liberal position held by the majority of Tesla owners, said the analyst, asking not to be quoted by name when talking about politics.

How much of an impact Musk’s controversial comments and actions will have long-term is uncertain. Indeed, while fewer potential buyers were considering Tesla products during the third quarter, sales actually rose to 343,830 sedans and SUVs, up from the 254,695 vehicles Tesla delivered during the second quarter.

But the latest figure was nearly 8% below the consensus sales forecast of 371,000 Tesla vehicles by industry analysts, based on data collected by FactSet. And it came in below the 365,923 vehicles Tesla said it produced between July 1 and Sept. 30.

Tesla has a history of rebounding from setbacks

It’s still too early to tell what will happen during the fourth quarter which, several industry executives said in L.A., will be the real measure of whether or not the EV-buying public is getting alienated by Musk.

As the KBB study noted, “We have seen Tesla’s shopping numbers drop before and they always eventually rebound. It will be interesting to see if they rebound more slowly or quickly this time around.”

But such a rebound will have to count out potential buyers like Arlene “Kofi” Fischhoff, an Oakland, California physician who was “seriously considering getting (a Tesla). I think they’re real cool. They’ve got great technology. But (Musk) has been acting so nutty it’s hard to support him at this point. And it’s hard to separate him from Tesla.”

Controversy extends beyond U.S. shores

Making matters potential worse, it’s not just American motorists who are rethinking Tesla. Fawn Brown and her husband moved to Eindhoven, Netherlands, earlier this year and had been strongly considering a Tesla. The automaker has been hoping to win over buyers Europe and recently opened a factory in Berlin to support that market. But Musk’s recent behavior “was the final nail in the coffin,” said Brown, noting the family instead purchased a Toyota hybrid.

With a growing list of electrified options to choose from, potential customers like Fischhoff and Brown are finding it increasingly easy to walk away from Tesla. Whether the automaker can regain momentum could depend on how the public views the actions of its outspoken CEO Elon Musk.