Tesla is experiencing an unprecedented decline in sales, raising questions about whether CEO Elon Musk’s political stance is a contributing factor. While competition in the electric vehicle (EV) market has intensified, it remains uncertain if Musk’s outspoken views are directly influencing consumer choices.
Tesla saw its first-ever drop in global sales in 2024, with a 1% decline compared to the previous year. Though minor for some companies, this is significant for Tesla, which had recorded 38% and 40% growth in the previous two years. The company’s stock value has largely depended on expectations of continued expansion, making any slowdown noteworthy.
In the U.S., Tesla sales dropped 16% between December 2023 and January 2024, but such declines have been typical after the company’s year-end sales push. In January 2024, sales were down 24% compared to December 2023, a pattern that has been observed in prior years.
Competition and Other Challenges
Beyond Musk’s political involvement, Tesla faces substantial market challenges, including increased competition and pricing concerns. Legacy automakers like General Motors, Ford, and Volkswagen have introduced new EV models, often at competitive prices. Chinese automaker BYD has also gained ground, surpassing Tesla in global EV sales in the last quarter of 2024, particularly impacting Tesla’s performance in China and Europe.
In Germany, Tesla sales plummeted by 59% in January compared to the previous year, with Musk’s public support for the far-right Alternative for Germany (AfD) party potentially alienating some consumers.
Consumer Sentiment and Market Trends
While some reports suggest Musk’s political views might be driving buyers away, direct evidence remains inconclusive. A study by S&P Global Mobility examined Tesla’s customer retention across politically aligned states. In Democratic-leaning states, repeat Tesla buyers dropped from 72% in late 2023 to 65% in late 2024. Meanwhile, Republican-leaning states saw a slight increase in Tesla owner loyalty, from 47.6% to 48.2%.
Morning Consult polling reflects a rise in U.S. consumers unwilling to buy a Tesla, increasing from 17% in 2021 to 32% in 2024. However, the percentage of those likely to consider a Tesla has remained stable at around 16% over the past four years.
At the same time, more used Teslas are appearing on the market, with an average of 11,300 listed on Cox’s AutoTrader during the last quarter of 2024—a record high and a 28% increase from a year earlier. This surge could partly stem from the natural cycle of three-year trade-ins following the post-pandemic sales boom.
The Bottom Line
Car buyers prioritize factors like price, features, and overall value when making purchasing decisions. While Musk’s political activism might influence some consumers, experts suggest that the broader market challenges—such as increased competition and evolving consumer preferences—play a more significant role in Tesla’s sales decline.
“It’s too early to pinpoint polarization as a key factor in Tesla’s sales drop,” said Stephanie Valdez Streaty, director of industry insights at Cox Automotive. “There are many moving parts in this evolving market.”
Ultimately, while Musk’s politics may deter some buyers, Tesla’s struggles appear to be driven by broader industry trends rather than solely by the CEO’s controversial public presence.
