Are Elon Musk and Tesla still part of the popular kids?
That question became a fashionable topic Wednesday following the release of Tesla’s holiday-quarter earnings and a Bloomberg Businessweek feature on the electric-auto maker’s image.
In both cases, questions arose about whether Musk’s $44 billion purchase of Twitter in October and his subsequent antics—posting juvenile jokes, embracing of far-right fanatics, demanding erratic changes to the social media platform—are weighing on Tesla’s sales.
On Wednesday’s earnings call after the release of fourth-quarter financial results, which showed record-breaking profits of $3.7 billion, an investor asked Musk how he planned to address polls suggesting his actions have damaged Tesla’s brand. Musk responded by claiming that he’s still “reasonably popular,” citing his Twitter follower count exceeding 127 million.
“I might not be popular with some people, but for the vast majority of people, my follower count speaks for itself,” Musk said. “I’m the most interacted social media account, maybe in the world, but certainly on Twitter.”
The Bloomberg Businessweek article, meanwhile, posited that Musk’s Twitter shenanigans have dented his self-styled image as a master businessman and poisoned the Tesla brand by alienating eco-conscious Democrats. As evidence, the authors pointed to sagging growth in Tesla vehicle demand; a YouGov poll showing Musk’s favorability in decline; comments from a few auto analysts; and a smattering of anecdotes that put the entrepreneur in an unfavorable light.
“Back when Musk was best known as a crusading environmentalist and his waiting lists stretched for years, buying a Tesla signaled you were part of an elite cohort of early adopters,” the Bloomberg Businessweek authors wrote. “Today, boasting about your Tesla is somewhere between basic and cringe. You’re either a boring rich guy buying a sensible sedan or a red-pilled weirdo—or both.”
The focus on Musk’s likability feels a bit sophomoric, though it’s no laughing matter. Part of Tesla’s allure rests in its cutting-edge image, which Musk helped hone through years of braggadocio and business breakthroughs. There’s also no doubt that Tesla has hit a speed bump: The company reported a 40% increase in vehicle deliveries in 2022, falling short of its 50% target, and ended the fourth quarter with excess inventory.
But are we sure that Musk’s tomfoolery is contributing that much to Tesla’s sales growth stumbles? As it stands, there’s minimal proof that Musk has caused Tesla’s slump, and the evidence showing a correlative effect is muddled.
To start, let’s look at the reasons why people purchase electric vehicles—and Teslas in particular.
A Consumer Reports survey of roughly 8,000 people conducted in early 2022 found that vehicle quality ranked far and away as the most important “social/emotional” influence in their car buying decision. When asked to pick their top three of nine listed factors, 57% selected “the vehicle’s power and performance,” and 54% chose “style/look of the vehicle.” Only 10% picked “image [what the car says about you],” and 4% said “social norms [desire to have a vehicle similar to friends, family, neighbors, coworkers, etc.].”
Furthermore, a survey conducted in late 2020 and early 2021 by market research firm Escalent found prospective Tesla buyers were most interested in the battery quality, performance, styling, manufacturing quality, and novelty of the company’s vehicles. Meanwhile, the survey showed that Musk himself was “considered the most negative aspect of the Tesla brand.”
Those attitudes might have changed in light of Musk’s erratic actions last year, but available evidence is mixed.
Morning Consult Brand Intelligence data points to a significant drop in popularity, with survey results showing Tesla’s net favorability rating among U.S. adults has tanked from 28.4% in early 2022 to 13.4% this month, according to a Forbes report. However, while the YouGov survey cited in the Bloomberg Businessweek article showed Americans see Musk in a slightly more negative light since he announced plans to buy Twitter in the spring of 2022, the pollster’s data shows Tesla’s popularity remains virtually unchanged during that time.
Ultimately, Tesla’s rocky 2022 more likely ties back to two primary factors: price and competition.
Tesla vehicles are on the expensive side, and consumers are tightening their budgets. To wit, Musk said Wednesday that the company is now “seeing orders at almost twice the rate of production” after instituting a major price cut aimed at boosting sales volume and making more vehicles eligible for EV tax credits in the U.S. (Musk didn’t provide specific figures on January orders.)
At the same time, more automakers are ramping up production of EVs. Volkswagen, Ford, and General Motors combined to boost EV sales 37% year over year in 2022, while Chinese rival BYD nearly doubled its sales of all-electric vehicles. (All still trail well behind Tesla in terms of total volume.)
There are enough valid signs to suggest Musk’s mania hasn’t helped Tesla’s brand. Whether his popularity and demand for Tesla vehicles are linked, though, isn’t nearly as certain.
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Jacob Carpenter
NEWSWORTHY
He’s back (if he wants). Meta lifted its suspension of former President Donald Trump’s Facebook and Instagram accounts Wednesday, ending a two-year ban that stemmed from his denial of the 2020 election results and encouragement of supporters who broke into the U.S. Capitol, Bloomberg reported. Meta’s president of global affairs, Nick Clegg, said the company generally doesn’t want to “get in the way of open debate on our platforms,” while noting that Trump’s accounts could be suspended again if he violates the company’s terms of service. Trump has not committed to returning to Facebook or Instagram.
Hold the phones. Global smartphone shipments fell 18% year over year in the fourth quarter of 2022, according to market research firm International Data Corporation, CNET reported Wednesday. The decline marked the biggest single-quarter downturn in smartphone deliveries on record and contributed to a full-year drop of 11% in 2022. Inflation and economic uncertainty contributed to a sharp drop in demand, while supply-chain problems hurt smartphone output.
Last ones out the door. IBM announced plans Wednesday to eliminate about 3,900 jobs, or roughly 1.5% of its workforce, despite issuing a better-than-expected outlook for 2023, Bloomberg reported. Company officials said the job cuts would primarily target staff left over from the spinoff of its Kyndryl and Watson Health divisions, while hiring will continue in higher-growth units. IBM said its fourth-quarter revenue was unchanged year over year, while its projection of mid-single-digit sales growth in 2023 topped analyst forecasts.
Cut now, grow later. SAP disclosed that it’s trimming 3,000 jobs, or 2.5% of its headcount, as part of a “very targeted restructuring” to start 2023, CNBC reported. The enterprise software outfit fell short of Wall Street’s holiday-quarter earnings and revenue estimates, though it still forecast double-digit profit growth for the current year. SAP officials also said they are exploring a sale of their majority stake in business software company Qualtrics, which SAP acquired in 2018 for $8 billion.
FOOD FOR THOUGHT
Washington’s crypto whiz. As Congress stumbles its way toward legislation targeting the cryptocurrency industry, U.S. Rep. Ritchie Torres (D-N.Y.), has emerged as a unique voice on the potential and perils of digital assets, Fortune’s Leo Schwartz reported Thursday. The 34-year-old wunderkind, who primarily represents the Bronx, sees blockchain technology as a potential tool for breaking consumer dependence on banks and other institutions, ideally to the benefit of his lower-income constituents. He’s proposing legislation that establishes stronger regulatory frameworks and sets transparency requirements for crypto companies—though his ability to build bipartisan consensus will be tested in the Republican-led House.
From the article:
Torres has embraced the promise of crypto and blockchains, hailing them as a conduit for financial inclusion and a tool for dispersing the concentrated power of money. He’s been unusually diligent about learning the technology’s ins and outs—and as a person of color from a modest background, he diverges from the increasingly mocked and distrusted stereotype of the Crypto Bro.
With crypto legislation serving as one of the 118th Congress’s top priorities, the distinctive stance of the millennial lawmaker from the Bronx could chart a path for the industry’s survival.
IN CASE YOU MISSED IT
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Tech layoffs are setting off a desperate scramble for foreign workers to find new jobs in 60 days before being forced to leave the U.S.: ‘I am always in fear of what will happen,’ by Prarthana Prakash
Coinbase investors fume as CPO cuts out early after pocketing $105M in stock sales, by Jeff John Roberts
ChatGPT could make the most tedious HR work obsolete, by Paolo Confino
How to conduct layoffs keeping employee well-being a priority along with business viability, by Sheryl Estrada
A.I. chatbot lawyer backs away from first court case defense after threats from ‘State Bar prosecutors,’ by Alice Hearing
Boeing’s chief sustainability officer: ‘We can’t count on hydrogen-powered commercial flights before 2050,’ by Christopher Raymond
BEFORE YOU GO
An unbreakable Bond. GoldenEye 007 officially lives twice. The iconic mid-’90s James Bond video game will be rereleased Friday for Nintendo Switch and Xbox following a lengthy rights battle, The Verge reported. Originally released in 1997 for Nintendo 64, GoldenEye 007 became one of the bestselling first-person shooter games of its generation, though it never spawned a sequel or update. Nintendo said it’s making the original game available via its Switch Online service, while Xbox parent Microsoft has remastered the title. Rumors of its reemergence have circulated for years, though multiple companies and individuals own rights over the game, complicating efforts to revive it.
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