Tesla’s Elon Musk dilemma: Polarizing CEO’s ‘political baggage’ is now weighing on sales, brand loyalty, investor confidence, and its stock price
Elon Musk’s politics risk becoming a millstone around the neck of
Tesla
as the $1.1 trillion company struggles to reignite the supercharged growth it enjoyed in the past.
Late last month, Tesla promised vehicle sales this year would increase once more even though they suffered a historic decline in 2024. Notably, though, the company backed away from Musk’s promise that volumes were set to rise by 20% at the bare minimum.
With well over a quarter of its stock market value up in smoke since its mid-December peak, the company is pinning its hopes on its
robotaxi pilot program
slated for June that could finally see it deliver on a nearly decade-long promise that Teslas will drive themselves without human supervision. Shares once again dropped on Tuesday, declining 4% in the session.
“Tesla’s biggest challenge in 2025 isn’t technology—it’s perception. Elon Musk’s political baggage is now weighing on sales, brand loyalty, and investor confidence,” warned Jacob Falkencrone, global head of investment strategy at Saxo Bank, in a
research note
on Tuesday.
Citing an
analysis this week
by Stifel that Tesla’s net favorability rating has dropped to just 3%, its lowest ever, he warned the road ahead is filled with uncertainty.
“The company faces declining sales, increasing competition, and growing scrutiny of CEO Elon Musk, whose influence—once an undeniable asset—may now be doing more harm than good,” wrote Falkencrone.
Already the stock is the worst performer among the Magnificent Seven, and more declines are possible, the Saxo Bank strategist warned.
Amid a second straight year of double-digit profit declines, Tesla’s stock price has paradoxically hit the eye-watering level of 90 times next year’s earnings per share. For 2025, the multiple is even more egregious, well into the triple digits—four times as much as its Mag7 peers.
Teslas labeled ‘SwastiCars’
Musk’s politics first began to evolve in the aftermath of the first COVID lockdown wave, when he decided to move Tesla headquarters out of California following a
notorious clash
with local health authorities.
But he only really became widely controversial in the aftermath of the
Twitter
acquisition in late 2022. He completed his political journey with his embrace not only of Donald Trump’s MAGA base, but his full-throated
endorsement of the far right
in Europe, including Germany’s AfD and English nationalists like Tommy Robinson.
Following Musk’s salute during the Trump inauguration, which many people said looked like the Nazi “Sieg Heil” gesture, users
review-bombed
a video on the refreshed Model Y by the
Fully Charged Show,
calling Teslas “SwastiCars” that can drive from Berlin to Warsaw on one charge—a reference to Adolf Hitler’s blitzkrieg.
Now, Musk’s Dutch customers are debating whether they feel “
Tesla shame
” while demand in Germany
plummeted 60%
in January, shrinking its share of the EV market from 23% two years ago to just 3.7% last month.
The Tesla CEO has taken little notice of it. His exhortation late last month to far-right Germans, absolving them of any shame they might feel about Hitler, earned Musk a
stinging rebuke
from the director of Israel’s Holocaust memorial museum.
Musk is a huge fan—of himself
It’s not just his politics that is causing people to rethink their opinion of the entrepreneur, either. Musk’s antics themselves are increasingly being seen by those both on the left and the right quite simply as
cringe
.
On Tuesday, for example, Musk demonstrated he’s once more the biggest fan of himself. Posting under the avatar name “Harry Bōlz,” he wrote: “I need to meet this Elon guy. He sounds awesome,” after podcaster Joe Rogan effusively praised the entrepreneur.
A number of Twitch streamers in the
gaming community
he sought to lure to X are now
condemning
the Tesla CEO after he admitted
going on Rogan’s show to lie
about how good he was at video games, without so much as
acknowledging it was wrong
.
“Tesla’s brand favorability is at an all-time low, and his polarizing views are alienating core customers, particularly in environmentally conscious markets,” Saxo Bank’s Falkencrone added.
Right now, the most robust source of demand for Tesla comes from the Far East, where censorship in the form of the Great Firewall of China ironically insulates consumers there from his recent behavior, as X is banned in the country.
