Tesla turmoil: Elon Musk’s empire hits a bump

Tesla for years has commanded stronger customer loyalty in the U.S. than any other major automotive brand. But, the loyalty has taken a sharp hit following CEO Elon Musk’s public endorsement of President Donald Trump last summer, according to data from research firm S&P Global Mobility.

According to data reported by Reuters, Tesla’s brand loyalty surged in June 2024 when 73 percent of Tesla-owning people in the market preferred another Tesla for a new car.

Unfortunately, the loyalty rate for the reputable brand started to plunge in July 2024 when Musk vouched for Donald Trump after the assassination attempt on Trump in Pennsylvania.

In March, Tesla’s loyalty dropped to 49.9 percent. The decline occurred after Musk launched an initiative to cut the costs and started laying off the thousands of government employees. 

In May, the rate bounced to 57.4 percent, leading it back above the industry average, according to S&P recent data.

This recent recovery in the loyalty points has put Tesla on par with Toyota. But it is still behind Ford and Chevrolet.

Unprecedented downfall

Tom Libby, a S&P analyst, called this decline “unprecedented” as the industry-leading automotive brand fell so quickly to industry-level average.

“I have never seen this rapid of a decline in such a short period of time,” he said.

Recently, Tesla has granted Musk 96 million shares worth $29 billion in a new deal. The purpose of the deal signed on Monday August, 4, is to strengthen the position of the CEO at a time when he is grappling with a court ruling that invalidated his original pay deal for being unfair to shareholders.

According to some analysts, the political leanings of Musk has pushed the customers away from the EV pioneer. Seth Goldstein, an analyst at Morningstar said: “If you have Democratic leanings, then perhaps they consider other brands in addition to Tesla.”