Elon Musk is destroying Tesla’s brand with erratic and divisive behaviour, experts say

Tesla has hit rock bottom - with sales in Australia plunging 72 per cent and used cars flooding the market with no buyers. Experts say time is running out to save the brand.

Elon Musk’s increasingly erratic and divisive behaviour has thrust Tesla into a crisis, with sales plunging across the globe and used cars flooding the market.

Experts say time is rapidly running out to save the brand from its owner’s “toxic” image.

Mr Musk, who funnelled an estimated US$100 million (AU$158 million) to US President Donald Trump’s campaign, and now heads his Department of Government Efficiency, is an increasingly polarising figure.

But his foray into politics and a whole host of contentious social issues has become a major liability.

“I think the Tesla brand is losing its mainstream appeal,” Rajat Roy, an associate professor of marketing at Bond University’s Business School, told news.com.au.

“It’s become polarised and controversial, and the customer base is dwindling as a result. It’s position as a cutting-edge, environmentally friendly and luxury brand has changed very quickly, in large part due to Elon Musk’s actions.”

Protesters demonstrate against Elon Musk outside a Tesla dealership in Pasadena, California. Picture: AFP

Mr Musk and the brand are tightly intertwined, Dr Roy pointed out, and that was a positive for a long time when he was seen as an innovative disrupter who was changing the world for the better.

The problem is that Tesla’s dominant consumer base – and the pool of potential buyers of an electric vehicle – tend to be more liberal-minded, eco-conscious and aspirational.

“All of a sudden, those consumers are in an identity conflict,” Dr Roy said.

“You see people getting those stickers for their cars saying: ‘I bought this before Elon went crazy.’ It’s a manifestation of Elon Musk’s attitudes being inconsistent with theirs. It’s a dangerous situation.”

Consumer behaviour researcher Professor Nitika Garg from UNSW Sydney’s Business School said the brand damage is occurring at the worst possible time.

“Competition in the EV market is very fierce right now,” Professor Garg said.

“There’s a perception that Tesla has been resting on its laurels when it comes to their product range and their level of innovation. They haven’t kept pace with their competitors – particularly Chinese EVs.”

Major rivals like BYD and Xpeng are offering a stronger value proposition for many would-be buyers, she said.

At the same time, Mr Musk’s strong link to Tesla has become “toxic”.

Elon Musk has become an increasingly polarising figure and it appears to be hurting his business. Picture: AFP

Measurements of the value of the Tesla brand show its in steep decline. Picture: AFP

Across 2024, Tesla’s brand value slumped by 26 per cent – the second consecutive year of losses, according to research by Brand Finance.

While Mr Musk’s “antagonism”, political posturing and public persona played a role, the agency also noted Tesla’s ageing vehicle range and growing competition from other carmakers.

“There are people who think he’s wonderful, but many that don’t,” Brand finance boss David Haigh said. “If you’re buying electric vehicles, his persona is highly likely to impact your view of whether or not you want to buy one of his company’s cars.”

Fiery protests outside US dealerships have now gone global, with demonstrations held in Europe and the United Kingdom at the weekend.

While largely peaceful, there have been a few instances of vandalism and arson.

A photo shows a damaged Tesla charging station, burnt on the day of a so-called global ‘Tesla Takedown’, in France. Picture: AFP

Several vehicles were set on fire at a Tesla service centre in Las Vegas earlier this month. Picture: AP

Tesla sales in Australia plunged by 72 per cent in February, continuing a downward trend observed for some months. Data for March will be released later this week.

A total of 1592 cars were sold, well down on the 5665 vehicles snapped up in the same month in 2024.

Sales in Europe are down 42 per cent for the first two months of the year. The fall was even sharper in China – down 50 per cent in February – despite the brand’s long-running dominance there.

And there are signs that Aussies who drive Teslas are itching to get rid of them.

In February, Australia’s used car market was inundated with Tesla’s entry level Model 3, up 31 per cent month-on-month.

If the current a situation persists, Dr Roy believes the brand is in serious trouble.

“Companies think they own their brands, but they don’t really – consumers do. They make brands popular and famous and successful. Consumers are currently disowning Tesla, so it needs to act.

“I think Tesla needs a brand reset. Separating themselves from Elon Musk is probably a starting point. From there, it’s going to be a long and tough process.”

Donald Trump doing a promotional event for Tesla at the White House. Picture: Getty

Professor Garg said even consumers who are politically engaged or motivated might be unwilling to commit to the brand.

“If you’re a shareholder, you’d probably be worried, looking at the market slamming the brand from multiple sides,” she said.

And they are spooked.

Tesla was once the start of Wall Street but it has copped a financial beating in recent times, with its share value plunging by 30.5 per cent this year.

In a recent scathing note to investors, global financial institution JPMorgan Chase said there wasn’t an automotive brand in history that had lost “so much value so quickly”.

“While the effect on Tesla sales may have been more minimal in the past, and hence more difficult to tease out from other factors such as rising competition, it appears to have grown more acute since Mr Musk stepped into a more divisive new role in government,” its analysts said.

A series of posters critical of Elon Musk have popped up in bus shelters across London. Picture: Getty

Anti-Elon Musk graffiti at Tesla’s Hobart dealership. Picture: Supplied

Horror pics show world has turned on Tesla

VIEW GALLERY

Meanwhile, long-time Tesla backer and Wedbush Securities investment analyst Dan Ives told Forbes shareholder patience has clearly run out.

Mr Musk’s major role in President Donald Trump’s inner-sanctum and his foray into politics in Europe, South America and the United Kingdom, has sparked a “crisis”, Mr Ives added.

“The clock [has] struck midnight. Investor frustrations boiled over, and the more Tesla becomes a political symbol, the worse it is to the brand and the stock.”

Mr Ives said a bizarre stunt by Mr Trump, which saw him purchase a Tesla and show it off in the driveway of the White House, made for “great political theatre” but did nothing to resolve the current demand issue and brand problem.

“And in some ways, [it] makes it more of a political lightning rod issue for Tesla.”

Wall Street is bracing for a bleak sales update report from Tesla this week.

Deutsche Bank analysts expect a “major reset” on expectations for the coming few years.

“Our view is that Tesla’s stock has been under pressure recently driven by much weaker auto volumes, broader de-rating in growth assets, and to some extent, political-policy uncertainty,” the bank said.

The damage to the brand from Mr Musk’s antics had only made this climate more challenging, it said.

Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment, told Forbes he fears the pain is just beginning.

“The irony is that the most important company for climate and the environment in the world is now being treated like a pariah because of Elon,” Mr Gerber said. “It’s crazy.”