My desire to own a Tesla took root back in 2012 when Elon Musk, then not widely-known, visited the Financial Times’ office in London to discuss his electric vehicle venture. As the FT’s environment reporter at the time, I had some knowledge about Musk and his red Tesla, which apparently could reach 60mph quicker than one could ignite a cigarette.
Seeing the vehicle in person left me even more captivated and envious, especially when a colleague was offered a spin around the block. However, over the years, my fervour has abated, not because of my envy, but due to a change of heart regarding Tesla. This is partly due to Musk motivating other manufacturers to up their game in producing electric vehicles, providing consumers with cheaper and diversified options.
Another reason relates to Musk’s increasingly controversial actions on social media, specifically on X, a platform he acquired in 2022, which has since declined drastically under his reign. His prediction of an impending ‘civil war’, a response to a video of far-right riots across UK cities attributed to ‘mass migration and open borders’, has added fuel to his already murky image.
Seeing the Downing Street refute the billionaire’s provocative statements took me back to a similar situation when he supported an anti-Semitic post on X, which led to the White House rebuking him, companies withdrawing their advertisements, and numerous critics asking him to back off.
Regardless of the backlash from G7 governments and multinational firms, Musk persisted. Despite apologising for his November post, he allowed X to reinstate various controversial figures, such as Tommy Robinson, a well-known far-right activivist in the UK.
Considering all this, I’ve decided against purchasing a Tesla, even if it won’t affect Tesla’s success, given the sales record of their Model Y sports utility vehicle in 2023. This, however, does bring up the question of when a CEO’s controversial deeds start negatively impacting the company’s reputation.
Gerald Ratner, ex-CEO of a jewellery conglomerate in Britain, is synonymous with self-destructive corporate conduct, following his infamous declaration in 1991 that some of his products were poor value because they were downright rubbish.
Unlike Ratner, Elon Musk frequently lauds his creations, drawing comparisons with Michael O’Leary. The controversial head of Ryanair, who lambasted regulators as idiots and slammed airport operators as extortionists, used these tactics as part of his low-budget airline branding.
Regardless of personal views on O’Leary, sometimes, Ryanair is the only feasible option for certain travel routes. Comparatively, purchasers of electric cars have a broad range to choose from. This variety is one explanation why analysts predict that Musk’s polarising nature could risk undermining his business.
As Shahar Silbershatz, Chief of Caliber, a market research company that monitors Tesla’s standing daily, informed me last week, Tesla’s “consideration rates” or prospective buyer’s share, have been on the decline in America since Musk began being controversial on Twitter, now named ‘X’, towards the end of 2022.
He believes these rates to be an effective sales forecaster, and Caliber’s data reveal a drop in Tesla’s scores – falling from roughly 40 per cent in November to 30 per cent come February. This dip aligns with an upward incline in controversies, including accusations of anti-Semitism.
Interestingly, the decline has been more pronounced among Democrats, typically more inclined towards electric vehicles. Even before Musk’s endorsement of Donald Trump, the Republican candidate, in July, Tesla’s Democratic scores had nosedived, as indicated by Caliber’s early August data.
Whether Musk’s erratic behaviour is the cause of these shifts is unclear. Tesla has faced numerous challenges, including increased interest rates and supply chain issues. But, as Silbershatz points out, amidst these difficulties and burgeoning competition from other vehicle manufacturers, Musk could be driving away his “natural buyers” in the US and now the UK.
Copyright The Financial Times Limited 2024
– Tune in to our weekly Inside Business podcast – Catch the latest episode here.