Tesla brand loyalty plunges after Musk backs Trump

Tesla is facing a sharp decline in brand loyalty following a controversial turn in the company’s public image. According to data from S&P Global Mobility, loyalty to the electric vehicle manufacturer has dropped significantly since mid-2024, coinciding with CEO Elon Musk’s endorsement of Republican presidential candidate Donald Trump.

The data, published in a report by Reuters, shows that Tesla’s customer retention—once among the highest in the auto industry—reached a peak in June 2024, when 73% of Tesla-owning households in the market for a new vehicle chose to purchase another Tesla. However, this trend reversed rapidly after Musk publicly backed Trump in July, shortly after an assassination attempt on the former president at a campaign event in Pennsylvania.

Industry Shock at Speed of Loyalty Decline

The drop in consumer trust has caught industry analysts by surprise. Tom Libby, an analyst at S&P Global Mobility, described the situation as “unprecedented,” saying, “I’ve never seen this rapid a decline in such a short period of time.”

This shift marks a dramatic fall from grace for Tesla, once the undisputed leader in customer loyalty among electric vehicle brands. The company’s image—closely tied to Musk’s persona—has increasingly polarized potential buyers, particularly in the wake of his heightened political visibility and controversial online activity.

Tesla Grants Musk $30 Billion in Shares Amid Internal Turmoil

Despite the fallout in consumer sentiment, Tesla’s board of directors has moved to secure Musk’s continued leadership by approving a massive stock award. On August 4, the company announced that Musk would receive 96 million Tesla shares, a package estimated to be worth around $30 billion.

The stock grant follows threats by Musk earlier this year to walk away from the company unless he received greater equity. Tesla’s board formed a special committee to assess the request—composed solely of Chair Robyn Denholm and Director Kathleen Wilson-Thompson—which ultimately recommended the package. The board later approved it.

“Retaining Elon is more important than ever before,” the company wrote in a letter to shareholders. “We are confident that this award will incentivize Elon to remain at Tesla.”

Ongoing Legal Dispute Over Previous $56 Billion Pay Package

This latest development comes as Musk and Tesla remain embroiled in a long-running legal battle over a separate compensation plan. In January 2024, a Delaware court invalidated a record-breaking $56 billion stock award originally granted to Musk in 2018. Chancellor Kathaleen McCormick ruled that the package was “excessive” and criticized the board for failing to exercise independence, stating that Tesla’s directors appeared unduly influenced by Musk’s dominance within the company.

The ruling has reignited broader debates about executive compensation, corporate governance, and accountability within major tech firms.

Looking Ahead

As Tesla braces for the political and legal turbulence surrounding its CEO, its brand strength among consumers appears to be taking a hit. While Musk’s supporters continue to view him as a visionary, growing skepticism from both the public and legal authorities may complicate the automaker’s efforts to maintain its leadership in the EV market.

Whether the newly approved $30 billion share award helps stabilize the company—or deepens existing fractures—remains to be seen as Tesla navigates one of the most tumultuous chapters in its history.