Polarizing CEO’s ‘political baggage’ is now weighing on sales, brand loyalty, investor confidence, and its stock price
February 11, 2025
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Tesla’s brand favorability is at an all-time low, and Elon Musk’s controversial views and actions are alienating core customers, particularly in environmentally conscious markets, warned Saxo Bank’s global head of investment strategy. Tesla’s stock is down by more than a quarter since its mid-December peak and is the worst performer among the Magnificent Seven.
Elon Musk’s politics risk becoming a millstone around the neck of Tesla as the $1.1 trillion company struggles to reignite the supercharged growth it enjoyed in the past.
Late last month, Tesla promised vehicle sales this year would increase once more even though they suffered a historic decline in 2024. Notably, though, the company backed away from Musk’s promise that volumes were set to rise by 20% at the bare minimum.
With well over a quarter of its stock market value up in smoke since its mid-December peak, the company is pinning its hopes on its robotaxi pilot program slated for June that could finally see it deliver on a nearly decade-long promise that Teslas will drive themselves without human supervision. Shares once again dropped on Tuesday, declining 4% in the session.
“Tesla’s biggest challenge in 2025 isn’t technology—it’s perception. Elon Musk’s political baggage is now weighing on sales, brand loyalty, and investor confidence,” warned Jacob Falkencrone, global head of investment strategy at Saxo Bank, in a research note on Tuesday.
Citing an analysis this week by Stifel that Tesla’s net favorability rating has dropped to just 3%, its lowest ever, he warned the road ahead is filled with uncertainty.
“The company faces declining sales, increasing competition, and growing scrutiny of CEO Elon Musk, whose influence—once an undeniable asset—may now be doing more harm than good,” wrote Falkencrone.
Already the stock is the worst performer among the Magnificent Seven, and more declines are possible, the Saxo Bank strategist warned.
Amid a second straight year of double-digit profit declines, Tesla’s stock price has paradoxically hit the eye-watering level of 90 times next year’s earnings per share. For 2025, the multiple is even more egregious, well into the triple digits—four times as much as its Mag7 peers.
Musk’s politics first began to evolve in the aftermath of the first COVID lockdown wave, when he decided to move Tesla headquarters out of California following a notorious clash with local health authorities.
But he only really became widely controversial in the aftermath of the Twitter acquisition in late 2022. He completed his political journey with his embrace not only of Donald Trump’s MAGA base, but his full-throated endorsement of the far right in Europe, including Germany’s AfD and English nationalists like Tommy Robinson.
Following Musk’s salute during the Trump inauguration, which many people said looked like the Nazi “Sieg Heil” gesture, users review-bombed a video on the refreshed Model Y by the Fully Charged Show, calling Teslas “SwastiCars” that can drive from Berlin to Warsaw on one charge—a reference to Adolf Hitler’s blitzkrieg.
Now, Musk’s Dutch customers are debating whether they feel “Tesla shame” while demand in Germany plummeted 60% in January, shrinking its share of the EV market from 23% two years ago to just 3.7% last month.
The Tesla CEO has taken little notice of it. His exhortation late last month to far-right Germans, absolving them of any shame they might feel about Hitler, earned Musk a stinging rebuke from the director of Israel’s Holocaust memorial museum.
It’s not just his politics that is causing people to rethink their opinion of the entrepreneur, either. Musk’s antics themselves are increasingly being seen by those both on the left and the right quite simply as cringe.
On Tuesday, for example, Musk demonstrated he’s once more the biggest fan of himself. Posting under the avatar name “Harry Bōlz,” he wrote: “I need to meet this Elon guy. He sounds awesome,” after podcaster Joe Rogan effusively praised the entrepreneur.
“Tesla’s brand favorability is at an all-time low, and his polarizing views are alienating core customers, particularly in environmentally conscious markets,” Saxo Bank’s Falkencrone added.
Right now, the most robust source of demand for Tesla comes from the Far East, where censorship in the form of the Great Firewall of China ironically insulates consumers there from his recent behavior, as X is banned in the country.
