Musk’s political antics, new competition hurting Tesla

Not long ago, Tesla’s electric vehicles were far and away the best on the market. If you wanted a stylish, long-range, easy-to-charge and feature-packed EV, Elon

Musk would be your most likely supplier — even if you hated his guts.

But not anymore. In the past year I test-drove many fantastic new EVS that hit the market in 2021 and 2022 — cheap ones, expensive ones, big ones, small ones, strange ones, boring ones. Although I liked the Teslas I drove, the truth is that many of the best EVS on the market are not made by Musk.

The new competition makes Musk’s recent role as the town crier for the online right especially puzzling and, for his car company, perilous. Musk’s chaotic and polarizing tenure as Twitter’s chief executive — during which he’s embraced far-right tropes and generally behaved like a rich bully on a power trip — already seems to be battering Tesla’s brand.

The Wall Street Journal reported last month on a survey showing that perceptions of Tesla have been falling steadily since May, shortly after Musk began his bid for Twitter; between October and November, the period when Musk took ownership of Twitter, sentiment among Democrats toward Tesla plummeted, while favorability among Republicans rose slightly.

“He’s talking people out of buying cars that they want to buy,” Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, told me.

“I don’t care if you’re selling pizza or popcorn or whatever you sell, getting into politics with customers never wins,” Gerber said.

It’s hard to disagree. A few weeks ago, I test drove Chevy’s new Bolt EUV. I was bowled over.

With such great alternatives that carry none of Musk’s political baggage, why does Elon keep acting as if customers have no choice — as if he’s the only game in town?

At its peak last fall, Tesla hit a stock market valuation of more than $1 trillion, greater than the combined value of the five largest automakers in the world. Tesla looked unstoppable. While rival manufacturers suffered supply shortages that held back sales through much of 2021, Tesla’s investments in building its own software and components allowed it to ride out supply-chain kinks, resulting in record sales.

Then, inexplicably,

Musk turned to Twitter and pushed Tesla off a cliff. This year, as he sold tens of billions of dollars of Tesla shares to finance the Twitter deal, Tesla’s shares plummeted by more than 60%. Its slump is deeper than that of most of its rivals and far more than that of the S&P 500, which is down about 19% for the year.

Not all of Tesla’s problems are of Musk’s making. Like other global manufacturers, the company has faced production delays in China related to COVID-19. The Federal Reserve’s steady increases in interest rates and the looming prospect of a recession have also dampened Tesla’s fortunes. On Twitter, Musk has repeatedly blamed the Fed for Tesla’s stock swoon. But analysts and investors I talked to said these were side issues.

“Tesla is Musk and Musk is Tesla,” said Dan Ives, an analyst at Wedbush Securities.

Colin Rusch, an analyst at the investment firm Oppenheimer & Co., pointed out that Tesla enjoys a multiyear lead in certain EV technologies. It has invested in advanced battery design and more efficient manufacturing processes, areas in which its rivals are only just getting started. Still, Rusch recently downgraded his expectations for Tesla’s stock price, citing increasingly negative sentiment toward Musk.

A lot of people think of their cars “as a way to signify a kind of identity,” Rusch told me, “and the Tesla brand and what it signifies has come to mean a few more things than it did before.”