Tesla’s stock price plummeted 12% on July 24 after its earnings report fell short of Wall Street expectations.
There are multiple reasons for the car company’s sluggish sales and declining profitability – profits that have dropped 45% from the second quarter of 2023. These include growing competition from other electric vehicle (EV) manufacturers, product recalls, rollout challenges, and an overall softening of the EV market.
But several astute analysts have also argued that the politics of Tesla’s CEO, Elon Musk, are dragging down its car sales. Musk has increasingly trafficked in right-wing, transphobic, white supremacist, and conspiratorial communications since purchasing Twitter (now X) in 2022. In the past few weeks alone, he has pledged $180 million to help Donald Trump get elected president, declared his own trans child “dead,” spread an offensive deep-fake video of Kamala Harris, and posted the following about the presumptive Democratic nominee for president:
Shamala is an extinctionist. The natural extension of her philosophy would be a de facto holocaust for all of humanity!
It’s no surprise, then, that a July 21-23, 2024, YouGov-Economist Poll revealed opinions of Musk that are deeply polarized by partisanship. His net rating (favorable minus unfavorable) in that survey was -67 among Democrats/Democratic-leaning independents and +49 among Republicans and GOP-leaners. Overall, Musk’s net rating was -9 (40% favorable vs. 49% unfavorable), with 34% of U.S. adults rating him very unfavorable and only 17% holding a very favorable opinion of him.
Who buys EVs? Democrats
Musk’s profound unpopularity with Democrats is especially problematic for Tesla. Indeed, the graph below shows that the billionaire is alienating the exact same consumers who are most likely to buy electric vehicles.
You can see in the chart that the partisan divide over EVs is nearly as large as the divided opinion about Musk himself. Yet, while 80% of Democrats now rate Musk unfavorably, 82% of Republicans said that they wouldn’t even consider buying an electric car in a March 2024 YouGov-Economist survey.
Why EVs are so polarizing
The partisan divide here isn’t particularly surprising, either. After all, concerns about climate change and other environmental issues are sharply polarized by party identification. Trump’s repeated attacks against EVs have likely contributed to this polarization as well.
In fact, the Republican presidential nominee recently distinguished his affinity for Musk from his aversion to EVs by saying, “I love Elon. And I have to tell you this about this, he endorsed me. He announced he’s giving me $45 million a month. And yet, I’m against certain electric [vehicles].”
To be sure, it’s unclear just how much Musk’s political alignment with Trump and other EV opponents has hurt Tesla. But it is inevitably bad for business when the very prominent face of an EV company is so deeply unpopular with the demographic group who is most likely to buy electric cars.
