Has Elon Musk’s Friendship With Donald Trump Destroyed Tesla’s Brand Value Forever?

‘I bought this before we knew Elon was crazy’ stickers cost just £4.30 + delivery on Etsy. That’s a lot less than it costs to replace the £59,999 Tesla when it inevitably gets vandalised in the street.
Since Donald Trump’s second inauguration on January 20th 2025 – where Elon Musk performed a gesture his supporters call a Roman salute but the rest of the world deems a Nazi salute – sales of Teslas in Germany have dropped by more than 70 percent. In France, sales of Elon Musk’s cars have fallen by 45%, 42% in Sweden and 48% in Norway. Australia also saw purchases plummet by 70%.
CBC states that Musk has lost $126 billion of his personal wealth in the first three months of 2025 alone (yet he remains the richest person on Earth). His controversial comments – just last month he called Danish astronaut Andreas Mogensen “fully retarded” – and his public support of far-right politics, have made his company’s share value drop below the $1 trillion mark as a result.
So is this game over for the Tesla brand? Not necessarily, says David Dubois, an Associate Professor of Marketing at INSEAD.
Short term vs long term future effects
In the short term, Musk’s political statements and cultural commentary have had a blatantly negative effect on the brand, Dubois tells us. “Musk’s championing of free speech and opposition to progressive policies have alienated some left-leaning consumers-many of whom were early adopters of Tesla due to their environmental consciousness,” he says.
However, over time, Dubois suggests, Musk’s political shift may simultaneously attract a new segment of more conservative buyers who appreciate his right-wing stance. Dubois notes, however, that conservatives are less prone to going green, and appealing to these consumers may require a full shift in Tesla’s communication strategy. “Tesla will need to reframe EV to boost fluency with conservatism’s philosophical tenets,” he points out.
One of the key risks in doing this is brand dilution, says Dubois. This is when a brand that was once strongly associated with sustainability and progressive innovation becomes politically polarized, meaning that it may lose some of its initial appeal.
How much can a CEO’s beliefs impact a company’s brand value?
When it comes to marketing, Tesla has gone against the grain, relying heavily on brand advocacy and word-of-mouth marketing rather than conventional advertising. What this means, Dubois says, is that consumer sentiment has an outsized impact on its growth.
Until recently, Tesla had an 87 percent brand retention rate – and Elon Musk’s larger-than-life personality played a significant part in this. Now, however, it’s this same figurehead who is driving the company’s share value down.
And, as Dubois points out, if Musk’s political stance increasingly alienates early adopters, Tesla could see a decline in brand advocacy, potentially making it vulnerable to domestic competitors like Rivian, Lucid, legacy automakers expanding into the EV market. On a global scale, rising tariffs could further challenge Tesla’s position, especially as overseas competitors such as China’s BYD – dubbed the “Tesla Killer” – continues to gain traction by outpacing Tesla’s tech advancements.
To successfully navigate this balance between political engagement and consumer trust, companies must develop strategic consistency and authenticity, reveals Dubois. This is easier said than done. If, like Musk, a company’s CEO is politically active, evidence suggests that their views generally should not contradict the company’s stated values – as inconsistencies lead to consumer distrust.
The INSEAD marketing professor, who is one of the world’s leading scholars on data-driven marketing gives the example of Apple under Tim Cook’s leadership. “Cook has long been vocal on political and social issues, advocating for LGBTQ+ rights, privacy, and sustainability.
However, Apple has managed to avoid polarizing consumers because Cook’s stances align closely with Apple’s brand values of innovation, inclusion, privacy and sustainability.
Dubois also points to Apple prioritizing corporate action over rhetoric. “For example, its focus on reducing carbon emissions reinforces its positioning as a responsible company.” Similarly, in February of this year, Apple’s shareholders voted against ending its DEI programme despite Trump’s push to reduce these types of initiatives, building on its value of inclusion.
Dr Zhibin Lin, a Professor in Marketing at Durham University Business School, says CEO credibility rests on three key dimensions: expertise, trustworthiness, and attractiveness.
With this in mind, Musk’s behaviour creates a “reputational paradox” for Tesla. Dr Lin says, “While recent political controversies may have somewhat damaged his trustworthiness and attractiveness, [Musk’s} expertise remains strong. Given his high visibility, his actions have an outsized impact, amplifying both positive and negative effects.”
How might Tesla repair its reputation?
Despite this, Dr Lin says calling Tesla’s reputational damage “irreparable” is premature.
“Tesla’s technological strengths and product quality can serve as a reputation buffer, and consumer responses are divergent-some distance themselves from the brand, while others may be drawn to it,” he says.
Looking ahead, Tesla faces three possible scenarios, says Dr Lin:
- Reputation bifurcation: with sales remaining strong in Musk-friendly markets
- Recalibration: shifting the focus to Tesla’s technology
- A deeper decline: if Musk’s controversies continue and overshadow Tesla’s core strengths
Besides, we’ve seen companies recover from controversial CEOs in the past. One example Dubois raises is Papa John’s former CEO, John Schnatter, who made controversial remarks about NFL protests and used racially insensitive language.
This led to a massive consumer and franchisee backlash. The brand had to engage in a complete rebranding effort, distancing itself from Schnatter and hiring a new CEO to regain trust.
Another example for David Dubois is Uber’s 2017 CEO Travis Kalanick, who announced that he would join former U.S. President Trump’s economic advisory council. This sparked criticism from the company’s progressive-leaning consumer base. The #DeleteUber movement gained traction online after Uber was seen as undermining a New York taxi strike protesting Trump’s immigration policies.
Although Kalanick quickly stepped down from the council, Uber growingly faced scandals related to workplace harassment, aggressive leadership, and allegations of driver exploitation. The company’s toxic work culture became a major issue, causing reputational damage and a loss of consumer trust. As a result, competitor Lyft was swift to capitalize on Uber’s missteps, gaining market share.
Dara Khosrowshahi was brought in to rebuild the brand’s reputation. Uber focused on rebranding as a socially responsible company – introducing stronger driver benefits, safety features, and an emphasis on ethical corporate governance and the company shifted toward advertising focused on diversity, safety, and community impact, with some success – but customers tend to have long memories.
Will Musk run Tesla into the ground?
As we’ve seen, a brand’s recovery from a controversial CEO is possible – but it often involves bringing in a new CEO. In Musk’s case, the brand is very much tied to his own image, making it even more difficult to recover.
So, will Musk drive Tesla into the ground? With prominent investors such as Ross Gerber already calling loudly for Musk to step away from the company in order to avoid further damage and protect its prospects, time will tell.
By Chloë Lane
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