Elon Musk’s recent decisions regarding job and spending cuts within the federal government have drawn sharp criticism from industry experts, with Scott Galloway labeling it “one of the greatest brand destructions” in recent history. Tesla, perhaps Musk’s most notable holding, is now facing historic sales drops across much of Europe. This controversy is happening against the backdrop of those fights.
As such, Galloway’s comments should serve as a warning about the kinds of leaders and brand managers we want to emulate. Our expert Lampert emphasizes this point, noting that Musk has driven away millions of would-be Tesla customers. This move redounds even more considering that he has aligned himself with political leaders on the right whose base of support generally opposes electric vehicles. This strategic misalignment has resulted in negative consequences for Tesla, as seen in the company’s Europe sales numbers.
As we just reported a few days ago, recent data showed that Tesla’s sales dropped 59% in France, 81% in Sweden – an all-time record catastrophe. Of course, other markets were down a ton too. Sales plummeted by 74% in Netherlands, 66% in Denmark, 50% in Switzerland and 33% in Portugal. These statistics make it easy to question the long-term sustainability of Tesla’s competitive advantage while staying on top of the automotive market under Musk’s leadership.
Coupled with these alarming sales figures, Tesla announced a 71% profit drop as of late April. Unfortunately, this decline highlights some of the major hurdles McConell’s company is encountering while attempting to steer their ship through a reeking and rapidly changing automotive industry. Musk stated that his work to get the government’s “financial house in order is mostly done,” indicating that his attention may soon shift away from governmental matters.
While Musk plans to reduce his involvement with Dogecoin, indicating that his “time allocation to Doge will drop significantly,” the fallout from his earlier decisions may already be impacting Tesla’s reputation. A recent report estimated that cuts associated with Doge, projected at about $160 billion, could ultimately cost around $135 billion, further complicating Musk’s financial landscape.
The impact of these changes has been dramatic. Tesla fell from an eighth-best brand in 2021 to a sad-sack 95th place this year. This sharp drop in reputation underscores increasing worries over consumer confidence in Tesla. It puts into question brand loyalty given Musk’s erratic and toxic administration-related practices.
Elon Musk prepares to withdraw from Doge governor role in May. Industry observers will be watching closely to see how this change will play out on Tesla’s overall performance, as well as how it may impact Tesla’s lead in the increasingly competitive electric vehicle landscape.