Is Elon Musk’s Political Stance Hurting Tesla Sales?

Tesla is facing an unprecedented sales slump, and competition in the electric vehicle (EV) market is heating up. The company experienced its first-ever decline in global sales last year, dropping by 1% from 2023. While a 1% decline may not seem significant for some companies, it is a sharp contrast for Tesla, which recorded growth rates of 38% and 40% in the previous two years.

In the U.S., Tesla’s sales saw a sharp 16% drop between December and January, though this pattern aligns with the company’s usual year-end sales push, followed by a slowdown in the first quarter. Despite these numbers, experts suggest it is too soon to definitively link the decline to a backlash against CEO Elon Musk.

Stephanie Valdez Streaty, director of industry insights for Cox Automotive, remains cautious about drawing conclusions. “It’s still too early to see any Musk backlash in the Tesla numbers,” she said. “We can’t pinpoint that polarization is causing people to buy or avoid a Tesla.”

Political Influence on Buyer Loyalty

Musk’s increasing involvement in politics, including his alignment with former President Donald Trump and other controversial figures, has drawn significant attention. Some analysts believe this may be affecting Tesla’s brand perception, particularly among progressive buyers who have traditionally been strong supporters of EV adoption.

Recent data from S&P Global Mobility suggests a shifting trend in Tesla’s repeat buyer rate, particularly in Democratic-leaning states. In states that have consistently voted for Democratic presidential candidates, the percentage of Tesla owners who repurchased a Tesla dropped from 72% in late 2023 to 65% in late 2024. Conversely, repeat Tesla buyers in Republican-dominated states saw a minor increase from 47.6% to 48.2%.

This decline in loyalty in key markets like California has cost Tesla approximately 1% of its market share in those regions. Further, a Morning Consult survey indicates that 32% of U.S. car buyers would now refuse to consider a Tesla, up from 27% last year and 17% in 2021.

More Used Teslas Hitting the Market

A potential sign of consumer dissatisfaction is the rising number of used Teslas being sold. Data from Cox Automotive’s AutoTrader platform shows that an average of 11,300 Teslas were listed for sale in the fourth quarter of 2024, marking a 28% increase from the 8,800 listed in the same period a year earlier.

However, analysts caution against viewing this solely as a backlash against Musk. The increase in used Tesla listings may also stem from the natural trade-in cycle following the surge in purchases during the pandemic.

Stronger Competition in the EV Market

While Musk’s political affiliations might play a role in Tesla’s recent struggles, increased competition is likely a bigger factor. Established automakers such as Ford, General Motors, and Volkswagen have aggressively expanded their EV offerings, often at lower price points than Tesla.

Meanwhile, Chinese automaker BYD has emerged as a major competitor, surpassing Tesla in global EV sales during the fourth quarter of 2024. While BYD has yet to enter the U.S. market, it is already taking significant market share in China and Europe. In Germany, Tesla sales plummeted by 59% year-over-year in January, a decline that coincided with Musk’s vocal support for the far-right Alternative for Germany (AfD) party.

Are Politics a Major Factor in Car Purchases?

Despite the speculation, industry experts argue that most car buyers prioritize price, features, and reliability over the political views of a company’s CEO. Ivan Drury, director of insights at car-buying site Edmunds, believes that while Musk’s political statements may turn off some potential buyers, they are unlikely to be the primary reason behind Tesla’s sales dip.

“There’s a huge swath of the population that doesn’t care about politics or it’s not top of mind,” Drury said. “A lot of people will put aside their feelings about politics when making a purchase like this and focus on price.”

As Tesla navigates these challenges, the question remains: will Musk’s political activism continue to impact the company’s reputation and sales, or is the decline simply the result of a more competitive EV landscape?