'Investor Warns: Few Democrats Will Buy Teslas After Musk Supports Trump'

Elon Musk’s Trump Endorsement Sparks Decline in Tesla Favorability

Elon Musk's endorsement of former President Donald Trump has negatively impacted Tesla's favorability among potential customers, according to new data from CivicScience. As of July 16, favorability among Democrats has declined to 16%, a significant drop from 39% in January. Republicans' approval also fell to 23% from 36% over the same period. CivicScience CEO John Dick notes that Democrats are more likely than Republicans to associate Musk's actions directly with the Tesla brand, potentially posing a threat to the business.

Tesla short seller Mark Spiegel warns that a boycott from Democrats could be disastrous for the electric vehicle (EV) maker. "He completely alienated most of his buying base… It's going to kill the business," Spiegel emphasized, suggesting that very few Democrats would now consider purchasing a Tesla. Longtime Tesla investor Ross Gerber expressed similar sentiments, revealing he's contemplating selling his vehicle due to Musk’s endorsement, which conflicts with his personal values. “I’m driving a Cybertruck and now it's like a MAGA truck,” Gerber said.

Research firm Strategic Vision also reported a decline in the number of Tesla owners identifying as Democrats, now at 26%, down from 39% last year. This trend started to decline sharply last November and has continued steadily downward. Potential problems for Tesla aren't just from this demographic shift; political threats to EV subsidies add further complications. Former President Trump and Senator JD Vance have pledged to eliminate government subsidies, a move that could severely affect Tesla's pricing and sales.

Mark Spiegel pointed out that if the $7,500 EV tax credit is removed, Tesla would likely have to raise prices, which could lead to decreased sales. Guggenheim’s Ron Jewsikow agrees, highlighting that the current federal tax credit is crucial for making Tesla vehicles affordable, and removing it would be detrimental. Brian Sponheimer of Gabelli Asset Management labeled the tax credits a long-standing "political football," calling for investor caution and a "wait-and-see approach."

Political Turbulence and Business Risks

During his speech at the Republican National Convention, Trump was unequivocal about his intentions to end what he termed the "electric vehicle mandate," asserting that it would save the US auto industry and reduce car costs for consumers. Gerber criticized the notion that Musk's financial support for Trump could prevent such policy changes. "The first thing they'll go after is all of the solar and EV tax credits," Gerber said, pointing out the existing substantial government deficit.

Interestingly, Musk appears unfazed by the threat of losing subsidies. "Take away the subsidies," he posted on social media platform X, asserting that it would ultimately benefit Tesla. This stance represents a notable shift from Musk’s previous electoral endorsements; in 2020, he supported President Biden and was critical of Trump in 2016. However, nearly thirty minutes after an assassination attempt on Trump on July 13, Musk publicly backed the former president, urging for his rapid recovery and criticizing Democrats in subsequent social media posts.

Tesla did not respond to requests for comment. The recent developments mark a tumultuous period for the EV manufacturer, as its ties to political figures continue to influence consumer sentiment and market stability.