Tesla is experiencing an unprecedented decline in sales, while competitors are quickly gaining ground. Recent news surrounding the company has been largely negative—but whether the political stance of its polarizing CEO, Elon Musk, is a contributing factor remains uncertain.

What is clear is that Tesla recorded its first-ever global sales decline last year, with a 1% drop from 2023. While this might not seem significant for some companies, it stands out for Tesla, which previously saw sales growth of 38% and 40% in the past two years. Tesla’s stock value has surged over the last decade, driven largely by expectations of continued expansion.

On a shorter timescale, Tesla reported a steep 16% drop in U.S. sales between December and January. However, such fluctuations are common for the company, which tends to push year-end sales to meet annual financial targets, followed by a decline in January. In fact, January 2024 sales were down 24% compared to December 2023.

Beyond Musk’s political involvement, Tesla is grappling with multiple challenges, making it difficult to attribute its sales struggles to any single factor.

“It’s still too early to determine whether Musk’s political stance is affecting Tesla’s numbers,” said Stephanie Valdez Streaty, director of industry insights at Cox Automotive. “We can’t definitively say that his polarizing image is influencing consumer decisions to buy or avoid a Tesla.”

Musk has drawn significant attention for his active role in reshaping the federal government, including co-hosting White House press conferences with former President Donald Trump. However, Tesla faces additional headwinds, including intensified competition and the pricing of its vehicles.

A potential shift in consumer interest can be seen in data from S&P Global Mobility, which analyzed Tesla loyalty rates in "blue states" (which have consistently voted for Democratic candidates in the past four presidential elections) and "red states" (where Republican candidates have won four consecutive elections). In blue states, the percentage of Tesla owners who repurchased a Tesla dropped from 72% in late 2023 to 65% by the end of 2024. Meanwhile, in red states, the rate of repeat Tesla buyers slightly increased from 47.6% to 48.2%.

This decline in loyalty among blue-state Tesla owners resulted in a 1% loss in market share for Tesla in those states, which include major car markets like California.

Additional anecdotal evidence suggests some buyers may be distancing themselves from Tesla due to Musk’s political activism. A recent Morning Consult survey found that 32% of U.S. car buyers would not consider purchasing a Tesla, up from 27% a year ago and 17% in February 2021. However, the percentage of buyers actively interested in Tesla has remained stable at around 16% over the past four years.

Despite growing negative sentiment toward Musk, the impact on Tesla sales remains unclear. A January poll from Quinnipiac University found that 53% of voters disapprove of Musk’s role in the Trump administration, while 39% approve. In contrast, a December 2022 poll showed that 36% had a positive view of Musk, while 35% held a negative opinion.

The Rise in Used Tesla Listings

One potential indicator of a backlash against Musk is the increase in used Tesla listings. The number of Teslas available for resale surged in late 2024, with an average of 11,300 Teslas listed on Cox’s AutoTrader platform—an all-time high and a 28% increase from the previous year’s 8,800 listings. However, Cox attributes this trend largely to a post-pandemic surge in Tesla sales three years ago, with many owners naturally trading in their vehicles after three years.

Increased Competition Driving Tesla’s Decline

Beyond politics, Tesla faces mounting challenges from rivals. Established automakers like General Motors, Ford, and Volkswagen have expanded their electric vehicle (EV) offerings, often at more competitive prices. In contrast, Tesla has made only incremental updates to its core lineup—the Model 3 and Model Y sedans and the Model X and Model Y SUVs. Its only new model, the Cybertruck, is a niche product with limited sales so far.

Chinese automaker BYD has also emerged as a major competitor, nearly matching Tesla’s global EV sales and surpassing it significantly in the fourth quarter of 2024. While BYD is gaining market share in China and Europe, it has yet to enter the U.S. market.

Tesla’s struggles are particularly evident in Germany, where sales plummeted 59% in January compared to a year earlier, according to the German Federal Motor Transport Authority. Notably, Musk has publicly supported Germany’s far-right Alternative for Germany (AfD) party, further fueling controversy.

Despite these developments, many industry experts believe that consumers prioritize factors like price, features, and overall value over a CEO’s political affiliations when making purchasing decisions.

“There’s a significant portion of the population that doesn’t focus on politics when buying a car,” said Ivan Drury, director of insights at Edmunds. “Many people are willing to set aside political views and base their decision on pricing and other practical factors.”

Ultimately, while Musk’s political involvement may be influencing some buyers, Tesla’s challenges extend far beyond the political arena, with increasing competition and market dynamics playing a crucial role in its recent sales slump.