Elon Musk is paying the price for mixing business with politics
Tesla sales are collapsing in Europe as the public are put off by Elon Musk’s vocal support for Donald Trump. It’s an object lesson in how politics can come at a cost to business, says Eliot Wilson
Last week it was reported that Tesla sales in Europe fell by 45 per cent in January compared to the same month in 2024, despite the market for electric vehicles being otherwise buoyant. This has led to inevitable speculation that the European public is turning away from the brand because of the high-profile and controversial involvement of its CEO, Elon Musk, in the provocative antics of Donald Trump’s second presidency: politics is costing him money.
Let us get some technical aspects out of the way which Musk’s supporters will – with justification – offer in mitigation. First, Tesla sales have tended to dip in January over recent years, though not by such a substantial margin. Second, the company’s Model Y compact crossover SUV, its bestselling model, is undergoing a facelift: the new version was launched in China in January for delivery there and in the United States, Canada and Mexico beginning in March, and it has only just become available to order in Europe.
The evidence suggests it is more than this, however. Electrifying.com, an advice site and marketplace for electric vehicles, found that 60 per cent of car buyers have been put off purchasing a Tesla because of Musk’s political views and activities. It is at least a contributory factor.
Musk is a deeply unpredictable and volatile personality. His views can change hugely – he supported the Democratic candidate in every presidential election from 2008 to 2020 – but he never pursues his ideology du jour with anything less than absolute and fervent dedication. When he eventually endorsed Donald Trump in July last year, he followed that up with $277m and became the largest individual donor of the election.
In the Doge house
In the same way, Musk has used his position as head of Trump’s new Doge(Department of Government Efficiency, not in fact a department but a temporary organisation within a rebranded US Digital Service) to attack the bureaucracy of the federal government with an impulsive, reckless ferocity. His supposed efficiency savings, through mass redundancies and unilateral institutional changes, have been carried out with hyper-partisan relish. When you own a social media platform with more than half a billion active monthly users like X, you can be sure your message will be heard.
Donald Trump’s popularity in Europe lags far behind his domestic approval ratings. A recent survey showed that in many countries, only a third of people think the president’s re-election is “a good thing” for US citizens, falling to a fifth who expect it to benefit their own country. This will matter not at all to Trump with his relentless “America First” focus, and Musk, who sleeps little anyway, will not lose any of it over associated unpopularity in itself. But the Tesla sales figures suggest that his political reputation is having commercial and financial consequences, even if, as the richest person in the world, he can afford to shrug it off.
It is worth noting, however, that Musk’s estimated net worth has fallen by $100bn in the past two months. His wealth, on paper at least, is so great it loses any real meaning: it is comparable to the GDP of Chile or Pakistan. But so substantial a fall demonstrates a relationship which Musk and others on the Trumpian right are eager to point out to their opponents: in business, politics isn’t cost-free.
Two of the most totemic objects of hatred for many right-wingers are diversity, equity and inclusion (DEI) and environmental, social and governance (ESG). They are regarded as policies which have been foisted on private enterprise by a pious, do-gooding liberal elite – the unrepresentative obsessions of people who are either misguided or actively malign.
DEI and ESG are intrinsically political activities, says the Right, and the private sector will suffer financial consequences for pursuing them. It may be, however, that Musk himself is the object lesson in the dangers of politicisation
There has been a movement away from these priorities. Last year, BlackRock significantly downgraded its ESG investments with some proposals labelled “overly prescriptive [and] lacking economic merit”. Similarly, whether it is accurate or not, DEI has created a perception of reverse discrimination and a diminution of meritocracy, and is now firmly in the sights of Doge. Musk inevitably took criticism to the extreme in January 2024 after an Alaskan Airlines Boeing 737 MAX suffered a mid-air panel blowout.
“Do you want to fly in an airplane where they prioritized DEI hiring over your safety? That is actually happening.”
DEI and ESG are intrinsically political activities, says the Right, and the private sector will suffer financial consequences for pursuing them. It may be, however, that Musk himself is the object lesson in the dangers of politicisation. He waded heedlessly into the political arena, and customers are deserting him. Businesses should choose their causes carefully.
Eliot Wilson is a writer and strategic adviser