Are Elon Musk and Tesla still part of the popular kids?
That question became a fashionable topic Wednesday following the release of Tesla’s holiday-quarter earnings and a Bloomberg Businessweek feature on the electric automaker’s image.
In both cases, questions arose about whether Musk’s $44 billion purchase of Twitter in October and his subsequent antics—posting juvenile jokes, embracing of far-right fanatics, demanding erratic changes to the social media platform—are weighing on Tesla’s sales.
On Wednesday’s earnings call after the release of fourth-quarter financial results, which showed record-breaking profits of $3.7 billion, an investor asked Musk how he planned to address polls suggesting his actions have damaged Tesla’s brand. Musk responded by claiming that he’s still “reasonably popular,” citing his Twitter follower count exceeding 127 million.
“I might not be popular with some people, but for the vast majority of people, my follower count speaks for itself,” Musk said. “I'm the most interacted social media account, maybe in the world, but certainly on Twitter.”
The Bloomberg Businessweek article, meanwhile, posited that Musk’s Twitter shenanigans have dented his self-styled image as a master businessman and poisoned the Tesla brand by alienating eco-conscious Democrats. As evidence, the authors pointed to sagging growth in Tesla vehicle demand, a YouGov poll showing Musk’s favorability in decline, comments from a few auto analysts, and a smattering of anecdotes that put the entrepreneur in an unfavorable light.
“Back when Musk was best known as a crusading environmentalist and his waiting lists stretched for years, buying a Tesla signaled you were part of an elite cohort of early adopters,” the Bloomberg Businessweek authors wrote. “Today, boasting about your Tesla is somewhere between basic and cringe. You’re either a boring rich guy buying a sensible sedan or a red-pilled weirdo—or both.”
The focus on Musk’s likability feels a bit sophomoric, though it’s no laughing matter. Part of Tesla’s allure rests in its cutting-edge image, which Musk helped hone through years of braggadocio and business breakthroughs. There’s also no doubt that Tesla has hit a speed bump: the company reported a 40% increase in vehicle deliveries in 2022, falling short of its 50% target, and ended the fourth quarter with excess inventory.
But are we sure that Musk’s tomfoolery is contributing that much to Tesla’s sales growth stumbles? As it stands, there’s minimal proof that Musk has caused Tesla’s slump, and the evidence showing a correlative effect is muddled.
To start, let’s look at the reasons why people purchase electric vehicles—and Teslas in particular.
A Consumer Reports survey of roughly 8,000 people conducted in early 2022 found that vehicle quality ranked far and away as the most important “social/emotional” influence in their car buying decision. When asked to pick their top three of nine listed factors, 57% selected “the vehicle’s power and performance” and 54% chose “style/look of the vehicle.” Only 10% picked “image [what the car says about you]” and 4% said “social norms [desire to have a vehicle similar to friends, family, neighbors, co-workers, etc.].”
Furthermore, a survey conducted in late 2020 and early 2021 by market research firm Escalent found prospective Tesla buyers were most interested in the battery quality, performance, styling, manufacturing quality, and novelty of the company’s vehicles. Meanwhile, the survey showed that Musk himself was “considered the most negative aspect of the Tesla brand.”
Those attitudes might have changed in light of Musk’s erratic actions last year, but available evidence is mixed.
Morning Consult Brand Intelligence data points to a significant drop in popularity, with survey results showing Tesla’s net favorability rating among U.S. adults has tanked from 28.4% in early 2022 to 13.4% this month, according to a Forbes report. However, while the YouGov survey cited in the Bloomberg Businessweek article showed Americans see Musk in a slightly more negative light since he announced plans to buy Twitter in the spring of 2022, the pollster’s data shows Tesla’s popularity remains virtually unchanged during that time.
Ultimately, Tesla’s rocky 2022 more likely ties back to two primary factors: price and competition.
Tesla vehicles are on the expensive side, and consumers are tightening their budgets. To wit, Musk said Wednesday that the company is now “seeing orders at almost twice the rate of production” after instituting a major price cut aimed at boosting sales volume and making more vehicles eligible for EV tax credits in the U.S. (Musk didn’t provide specific figures on January orders.)
At the same time, more automakers are ramping up production of EVs. Volkswagen, Ford, and General Motors combined to boost EV sales 37% year-over-year in 2022, while Chinese rival BYD nearly doubled its sales of all-electric vehicles. (All still trail well behind Tesla in terms of total volume.)
There are enough valid signs to suggest Musk's mania hasn’t helped Tesla’s brand. Whether his popularity and demand for Tesla vehicles are linked, though, isn’t nearly as certain.
Want to send thoughts or suggestions to Data Sheet? Drop me a line here.
Jacob Carpenter
