Consumers are exercising caution over Musk’s decision to switch gears from entrepreneur to partisan political player.
BERLIN: Tesla shares have plunged by nearly 40 per cent over the past six weeks, chalking up losses every week since its CEO Elon Musk made his high-profile move to Washington to support United States President Donald Trump.
The electric vehicle maker faces a bumpy road ahead in an increasingly competitive market, with experts suggesting that it has been hit by a fall in brand sentiment.
Consumers are exercising caution over Musk’s decision to switch gears from entrepreneur to partisan political player, they said.
DROP IN TESLA CAR SALES
In the lead up to Germany’s election last month, Musk – who is the world’s richest man – made an unprecedented entry into the country’s political scene by endorsing the far-right Alternative for Germany (AfD) party and shocking the establishment.
Observers noted that this might have been a controversial decision for the tech billionaire’s businesses – particularly Tesla, which counts Germany among its most important markets. The country is also home to its only factory in Europe.
Latest figures released in February show a significant fall in Tesla car sales across Europe.
In Germany, sales plunged 76 per cent, while other major EV markets – Norway, Denmark and France – registered drops of almost 50 per cent.
The poor showing is not just in Europe.
In California, the largest US market for EVs, sales have fallen for the fifth consecutive quarter.
Some automotive experts told CNA that this blow to Tesla is most likely a result of Musk’s political choices.
“When we compare all of the countries we are tracking individually model by model, we see that Tesla is either down or underperforming the market in almost every single one of those,” said Will Roberts, automotive research lead at EV research consultancy Rho Motion.
“It’s been popular and easy at the moment to look at the brand sentiment surrounding Tesla,” he added.
“Tesla is inextricably linked to Musk for sure, so we can’t ignore that. We can’t ignore what’s going on in the wider kind of political space and the wider conversation around that and around that brand.”
FALLING TESLA SHARES
Research has shown that the brand is struggling to find customers among Musk’s newfound political base on the populist right.
Instead, it is those who typically lean to the liberal left who buy electric cars.
European automotive analyst Matthias Schmidt said: “We expect a large part of the losses were in fact due to the toxic contagion from Musk’s political comments, particularly in markets such as Germany, where Germany is very sensitive to its history understandably.”
Tesla investors are not only concerned about the impact Musk’s political activities could have on the brand, but also over the firm’s ability to meet delivery targets, heightened global competition, and the threat of a coming trade war.
Some experts have cautioned that the early 2025 sales data may not offer the full picture when it comes to market trends.
With Tesla getting ready to launch its revamped Model Y, there is expectation that customers are holding off buying a car until the new model hits the market later this year.
TESLA’S COMPETITORS MAKING INROADS
Meanwhile, Tesla’s competitors are pushing hard to gain market share across Europe.
In early March, Germany’s biggest automaker Volkswagen launched its long-awaited entry level EV, pricing it at just under US$20,000 – almost US$15,000 below Tesla’s cheapest model.
Volkswagen is hoping to make inroads against Tesla at a time where it sees its US competitor seemingly distracted by politics.
Thomas Schaefer, CEO of the Volkswagen Passenger Cars brand, said: “We have a clear goal. By 2030, we will be the technological leader among volume manufacturers. We will advance, we will attack and we will achieve.”
Tesla’s Chinese competitors are also gaining ground.
Despite the European Union imposing additional tariffs on China-made EVs, prominent brands such as Nio and XPeng maintain that Europe remains a key market for their growth plans.
China’s top electric vehicle maker BYD also has plans to build a factory in Hungary in a bid to circumvent tariffs.
Source：CNA
