Elon Musk's Rift with Democrats: A Costly Misstep for Tesla

Tesla faces a sharp decline in California registrations

by Zain ul Abedin
Elon Musk's Rift with Democrats: A Costly Misstep for Tesla
© Maja Hitij/Getty Images

For years, Tesla has been synonymous with innovation and has largely attracted a Democratic buyer base. However, a seismic shift occurred last fall when CEO Elon Musk's political stances began to alienate this core demographic.

According to research conducted by Strategic Vision in October and November, there was a startling 60% drop in Democratic purchasers of Tesla vehicles, highlighting the risks of having a politically outspoken leader during a period when electric vehicle (EV) manufacturers are striving to broaden their appeal.

This decline in Democratic buyers correlates with Musk's increasingly public comments on controversial topics such as illegal immigration and antisemitism. Additionally, his public criticism of Disney for being overly "woke" has stirred significant media attention.

Musk himself later referred to one of his controversial tweets as "foolish." While Disney's CEO has defended the company's stance, emphasizing a focus on entertainment, the backlash has been palpable. Musk's vocal positions, which mirror the populist tones similar to those of Donald Trump, marked a stark departure from the "green hero" persona that previously defined him.

This pivot appears to be more than just personal branding - it's impacting Tesla's bottom line. In the first quarter, Tesla experienced its first year-over-year sales drop since the early pandemic days of 2020. This downturn has led to widespread layoffs and a 41% drop in Tesla's stock price throughout the year, signaling investor concerns about the company's future growth trajectory.

As Tesla's U.S. sales face a downturn, with a 44% decrease in Model 3 sedan sales and only a slight increase in Model Y SUV sales, the broader market for EVs is also showing signs of a slowdown. The U.S. political landscape further complicates this.

EV technology is a point of contention, particularly among Republican leaders who have criticized the push for EV adoption under the Biden administration.

Tesla's Political Backlash

Despite these challenges, Tesla's U.S. sales estimates from Motor Intelligence highlight a troubling trend.

In California, a traditionally Democratic stronghold, new Tesla registrations fell nearly 10% in the fourth quarter - a dramatic shift from the 43% increase seen in the previous quarter. The political divide over EV ownership has deepened, with Strategic Vision's survey last year showing that for every five Democratic EV owners, there are only two Republican ones.

This disparity is underscored by the ongoing Republican primary season, where candidates have openly criticized President Biden's EV policies. Interestingly, while Musk has expressed opposition to Biden, he has remained non-committal about supporting Trump in the upcoming elections, despite their apparent camaraderie.

Musk's nuanced stance on politics and its potential impact on Tesla was summed up in a tweet where he stated, "There is either a red wave this November or America is doomed." Despite these tumultuous times, Tesla began to recover some of its lost Democratic clientele by late February, as reported by Strategic Vision.

The company's reputation for making superior vehicles may still appeal to many, provided Musk can steer clear of further controversy. As the political and economic landscapes continue to evolve, Tesla's ability to adapt while maintaining its innovative edge will be crucial in determining its future success in an increasingly polarized market.

Elon Musk