Elon Musk’s Endorsement Of Trump Could Be A Grave Mistake For Tesla

Forbes

During Tesla’s earnings call this week, after the top electric vehicle maker posted disappointing results with worse-than-expected revenue from its car business, analysts and retail investors did not CEO Elon Musk the most obvious question: Why did you announce your vocal support for Donald Trump for president, when that could politicize Tesla’s brand for its mostly Democratic buyers?  Read the full story on Forbes: https://www.forbes.com/sites/alanohnsman/2024/07/24/elon-musks-endorsement-of-trump-could-be-a-grave-mistake-for-tesla/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, Elon Musk's endorsement of Trump could be a grave mistake for Tesla.

00:08During Tesla's earnings call this week, after the top electric vehicle maker posted

00:12disappointing results with worse-than-expected revenue from its car business, analysts and

00:17retail investors did not ask CEO Elon Musk the most obvious question.

00:22Why did you announce your vocal support for Donald Trump for president, when that could

00:26politicize Tesla's brand for its mostly Democratic buyers?

00:30Musk's only acknowledgment concerning the heated political campaign was conceding that

00:35a second Trump administration would hurt Tesla's auto business if it makes good on ending EV-related

00:40subsidies from the Inflation Reduction Act, which have provided big financial benefits

00:45for Tesla and made its cars cheaper for consumers to buy.

00:49Musk also conceded Tesla might not move ahead with plans for a plant in Mexico, as Trump

00:54has said he'd jack up import tariffs on autos made there.

00:58Musk said, quote,

00:59I guess it would be like some impact, but I guess it would be devastating for our competitors.

01:04It would hurt Tesla slightly.

01:07On Wednesday, Tesla shares dropped 12.3% to about $215.99 in Nasdaq trading.

01:14By midday Thursday, they'd climbed slightly back up.

01:18It should be noted that the Biden administration's legislation seeks to do exactly what the world's

01:23wealthiest person once claimed was Tesla's purpose, to, quote,

01:26help expedite the move from a mine-and-burn hydrocarbon economy towards a solar-electric economy.

01:34But the risk Musk's company faces is far greater than the potential loss of $7,500 tax credits

01:39for its buyers and generous incentives for its battery plants created by the law.

01:44Musk is inseparable from the Tesla brand, so associating it with Donald Trump, a vocal

01:49skeptic of climate change, could cause more consumers to shun it.

01:54Ross Gerber, CEO of Los Angeles-based wealth manager Gerber Kawasaki, and once among Musk's

02:00biggest fans, said, quote,

02:03Elon isn't doing anything with the thought of what's best for Tesla at this point.

02:07Tesla sales in California are down substantially because of this.

02:11California is the biggest market for Tesla and one of the biggest markets for cars in

02:14the world.

02:16About 25% of the cars in California purchased are now EVs, so when you think about the brand

02:21damage, it's now beyond repair.

02:25While Tesla vehicle sales worldwide dropped 5% to 443,956 units in the year's first half,

02:33they were down 17% in California, where the company logged 102,106 sales in the same period.

02:41This according to the California New Car Dealers Association, which reported these numbers

02:46this month.

02:47At 23% of Tesla's total volume, the golden state is by far its top market, rivaled only

02:53by China, the world's biggest buyer of EVs.

02:57And among U.S. buyers, people who identify as Democrats are most likely to purchase electric

03:02cars and trucks.

03:04Jessica Caldwell, head analyst for auto market researcher Edmunds, citing data that her company

03:10has compiled, said, quote,

03:12Democrats have an overwhelmingly more favorable opinion of EVs, with only 5% claiming to dislike

03:18EVs compared to 39% of Republicans.

03:22As America's partisan divides widen, Elon Musk's very public support of former President

03:26Donald Trump has the potential to alienate Democratic-leaning consumers who are more

03:31likely to be EV buyers and could therefore pose a significant threat to Tesla's bottom

03:35line.

03:38Already the appeal of both Musk and Tesla to Democrats is dropping noticeably this year,

03:43according to Civic Science, a Pittsburgh-based consumer research firm.

03:47Rachel Clayton, Civic Science's senior vice president, citing responses from more than

03:5216,000 people surveyed, said, quote,

03:55If we look month over month with how Tesla is viewed by Democrats, we do see a decline

04:00in favorability.

04:02In January, it was 36% favorable, 31% neutral, and 33% unfavorable.

04:08Favorable has dropped since then to just 17% for Democrats.

04:12Neutral is now 45%, and unfavorable is 38%.

04:18Musk's appeal to people who identify as Democrats is also falling, though it was already low

04:22with that group, based on responses from more than 8,000 people.

04:27Conversely, he's way up with Republicans.

04:30For most of this year, quote,

04:32Favorables for Musk among Republicans were flat at 50%, dipped a little bit in June,

04:38and then shot right up to 58% in July.

04:42Musk officially endorsed Trump on July 13, after the attempted assassination of the former

04:47president.

04:48Unfortunately, Republicans appear to be not as interested in Tesla's main product.

04:53Just 19% of Republicans have a favorable view of EVs, according to Edmunds data.

05:00For full coverage, check out Alan Onsman's piece on Forbes.com.

05:05This is Kieran Meadows from Forbes.

05:07Thanks for tuning in.

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