Recommendations of the Editorial team
Elon Musk’s high-profile involvement in American politics in recent years – culminating in him serving as a key adviser to President Donald Trump for several months – has cost Tesla dearly.
Once a brand beloved by liberals for its supposedly environmentally conscious electric vehicles, the automaker has become the target of organized protests from the same demographic. Many owners traded in their cars, while others expressed their dislike of the company’s right-wing extremist CEO with stickers on their bumpers:
“I bought this before Elon went crazy,” “Anti-Elon Tesla Club,” and “Elon is stupid” are just a few of the slogans that can now be seen on the country’s highways.
Economic consequences and the “Musk party effect”
The financial consequences of this reputational damage are difficult to quantify. The company’s shares plummeted while Musk served as the so-called Department of Government Efficiency (DOGE), an unpopular team tasked with undermining federal agencies.
Shares have recovered since then, but Tesla posted two consecutive quarters of declines in sales before recently reporting slight growth again.
How much of this lull is due to the public’s dislike of Musk – and how much is due to increasing competition from other electric car makers?
Yale study: One million fewer cars due to political polarization
A team of economists from the Yale School of the Environment investigated this question. Their report, released this week, came to a clear conclusion:
Had Musk not transformed into an openly and aggressively partisan personality, Tesla’s U.S. sales could have been 67 to 83 percent higher between October 2022 and April 2025 – the equivalent of 1 to 1.26 million cars.
The authors used county-level data on new registrations and party affiliations to find that the trend of rising Tesla sales among Democrats reversed in October 2022, just as Musk took over Twitter (now X), ushering in an era of right-wing disinformation and extremism on the platform.
In Republican-dominated regions, however, there was no decline in Tesla sales – an indication that political motives played a decisive role.
Democrats turn away – Republicans remain indifferent
“We would expect that increased competition or the lack of new models should impact Democrats and Republicans equally,” the authors write. “But they split up.”
The alienation of liberal buyers became even more evident when Musk financially supported Trump’s 2024 presidential campaign and served as a White House adviser.
According to the study, monthly sales in the first quarter of 2025 would have been about 150 percent higher without the so-called “Musk party effect” – losses that outpaced any potential gains among Republican buyers.
Competition benefits from Musk’s unpopularity
Between 2022 and 2025, US sales of electric and hybrid cars from other manufacturers increased by about one million vehicles – almost identical to the number of “missing” Tesla sales.
The researchers conclude that Musk’s unpopularity significantly strengthened the market share of the competition: “Without the Musk party effect, monthly sales of other electric and hybrid vehicles would have been approximately 25 percent lower in the first quarter of 2025.”
Musk’s political activities have increased competitors’ sales by 17 to 22 percent since October 2022.
Musk loses with liberals, but Tesla remains powerful
Overall, the researchers concluded that Musk’s “extracurricular” activities as a political kingmaker and government official in the Trump administration had a drastic impact on Tesla – particularly its core customer base of environmentally conscious Democrats.
Still, Tesla remains a gigantic market player with a value of over $1 trillion – more than any other automaker in the world.
Musk himself is increasingly pointing out that Tesla’s future does not lie in cars, but in artificial intelligence and humanoid robots. Research and development spending recently increased by 50 percent.
But even though Musk appears to be moving away from cars, Tesla’s profits still come from the vehicle business – the segment that has suffered the most damage from its political polarization.