09 Aug Business Insider : Elon Musk’s antics have turned off some Tesla buyers — but it won’t matter in the long run
Media Source : Business Insider
Aug 3, 2023, 8:46 PM GMT+8
A recent Bloomberg study found Tesla’s fans are loyal despite Elon Musk’s antics. It’s not likely interest in the brand will shift anytime soon, even with the next wave of EV buyers. Aly Song/Reuters
Just like Japan and Korea before it, China could snag American buyers with cheaper offerings. ERIC Piedmont / Getty Images; Arif Qazi / Insider
•Tesla has a strong and loyal fanbase that keeps coming back to the brand.
•But as the EV-buying population shifts, so might buying priorities and interest in the company.
•Yet Tesla’s advantages in terms of charging and pricing are likely to maintain its lead.
Tesla has been polarizing for some time, largely due to its chief executive, Elon Musk.
So far, this hasn’t really impacted Tesla’s stronghold on the electric-vehicle market. Even as new buyers enter the market, Tesla could stay immune for some time, experts say.
Generally, Musk has an extremely loyal customer base despite controversies like his acquisition of Twitter and shoulder-rubbing with certain political figures. But regardless of some worsening opinions of Musk, Tesla’s reputation has remained mostly unscathed. People buy and drive the cars regardless.
History repeats itself
For some time, many American car buyers swore off purchasing a non-American-made vehicle. Yet the industry eventually saw the proliferation of automakers like Toyota, Hyundai, and Honda — largely due to their affordability and fuel efficiency.
“There’s a difference between people’s allegiances to their country and what they buy at the store,” Bill Russo, CEO of advisory firm Automobility, previously told Insider.
People swore off Volkswagen after its several-billion-dollar diesel emissions scandal — yet the brand saw a bounceback. And many were calling to boycott GM after it received a massive bailout during the 2008 financial crisis, though the company has retaken the top-selling crown in the US.
It goes to show buying behavior and ideology aren’t always synced up.
“One thing that’s absolutely universal is people buy affordability,” Russo added.
Likewise, upcoming EV buyers might (and in some cases, already do) find themselves compromising on the way they feel about Tesla simply as a result of it being one of the best EV options in today’s market.
“Whether you like Tesla or Elon Musk or whatever, it’s probably irrelevant,” Martin French, managing director at consultancy Berylls, said. “They’ve proven that they’re the leader in EVs, and now they seem to be encroaching on some market share” from the gas-powered market, too.
Follow the money
Early EV adopters have been less financially motivated and more interested in a unique vehicle that’s futuristic, according to a Berylls study, thus automatically pulling them to Tesla. Future waves of buyers are going to lean more on what price tag makes sense.
Either way, a lot is working in Musk’s favor. He’s gotten a headstart on the rest of the EV industry, and the recent price war he’s waged makes his vehicles incredibly competitive.
Tesla Model 3 and Model Y EVs are going for as low as $40,240 and $47,740, respectively, while the average transaction price for EVs overall is $53,438 right now, according to Kelley Blue Book (and that number is weighed down by Tesla prices).
Carlos Tavares, CEO of Stellantis, recently said the EV pricing sweet spot is “around $25,000.”
If that’s the case, Tesla is one of few EV-makers close to that number, particularly when you take into account tax credits. In fact, Tesla earlier this week reminded customers about $15,000 worth of credits available to eligible California-based buyers, saying: “You could drive home a new Model 3 starting at $25,240 before taxes and fees, after combining the state vehicle rebate of up to $7,500 with the $7,500 federal tax credit.”
To be sure, there are other affordable EV offerings,including the $26,500 Chevrolet Bolt EV; the $27,800 Bolt EUV; the $27,800 Nissan Leaf; the $33,550 Hyundai Kona; the $38,995 Volkswagen ID.4; or the $39,950 Kia Niro (note, not all of those qualify for the tax credits that could bring their cost down another $3,750 or $7,500). Customers could choose from these brands or wait for the right product at the right price; several automakers say they have more affordable EVs in the works for the coming years.
But Tesla also has the longstanding advantage of its Supercharger network. Despite Tesla slowly losing market share over the past few years (down from 79% of the market in 2020 to 65% of the market last year), the company sold a record 466,000 cars in Q2.
“All of the research that we’ve done with EV intenders to date has demonstrated that Tesla might not get the sale, but if you are an EV intender, you will always have them in the consideration set,” Stephen Beck, managing partner of consultancy cg42.
“It doesn’t mean you’re going to look at a Tesla and look at a Mach-E or a Taycan or what Hyundai is doing or what Mercedes is doing, and still select that Tesla. But it does mean that today,” Beck added, “they’re going to be looked at.”
Any impact of less-than-positive sentiment is yet to materialize substantially.
“I wonder how fickle that’s going to be,” French said, “and how that will change in the next few years.”
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