• by Tanya Gazdik , July 24, 2024

Tesla reported its fourth connective quarter of disappointing profits amid reports that Elon Musk is stepping back his pledge of support to Donald Trump. 

Musk denies reports that he’s pledging $45 million a month to Trump, saying he doesn’t “subscribe to cult of personality,” Musk told conservative commentator Jordan Peterson in an interview.

It’s in Musk’s best interest to temper his partisan support.

“EVs are supercharging political debates among Americans in 2024,” according to Jessica Caldwell, Edmunds’ head of insights.

According to Edmunds survey data from earlier this year, Democrats have an overwhelmingly more favorable opinion of EVs, with only 5% claiming to dislike EVs compared to 39% of Republicans.

“As America’s partisan divides widen, Musk's support of Trump has the potential to alienate Democratic-leaning consumers who are more likely to be EV buyers, and could therefore pose a significant threat to Tesla’s bottom line,” Caldwell says. “The road ahead for Tesla is already laden with obstacles amid increasing global competition and an aging product lineup — and price cuts simply aren’t as effective as they once were in driving sales for the company. Giving prospective EV buyers any sort of political reason to avoid purchasing a Tesla is probably not what the company needs right now.”

Edmunds data reveals that a growing share of Tesla owners are more likely to purchase an EV over an ICE vehicle for their next purchase. Tesla should theoretically have the advantage of keeping such a large consumer base within the fold, but Musk's outspoken political leanings could give other automakers an opportunity to crack into Tesla's early and expansive EV buyer base.

Meanwhile, Tesla has put a planned factory in Mexico is on pause at least through the U.S. presidential election on Nov. 5. Republican candidate Trump, who Musk has endorsed, has been talking about imposing tariffs on Mexico-made products.

On the earnings call, Musk downplayed the risk to Tesla’s business if Trump wins office, even though the Republican has slammed the rise of electric vehicles.

Company investors also have been put in a holding pattern. 

“While they wait for Tesla’s long-term plans to come to fruition, they’re stuck enduring weaker vehicle output and sales,” according to Reuters. The carmaker, the world’s largest seller of battery-powered vehicles, is far off the pace of the 1.8 million cars it sold last year and warned for a second time Tuesday it expects to see a ‘notably lower’ growth rate in 2024.”