According to a new study by the National Bureau of Economic Research (NBER) and Yale, Elon Musk has caused colossal brand damage to Tesla and its sales, which is what many people have long believed.
The working paper has an estimated cost of 1.0 to 1.26 million cars in the U.S. alone, not counting further sales in the European market, as it is entitled “The Musk Partisan Effect” on Tesla Sales. The researchers conclude that these findings suggest that the sales of Tesla would have been 67-83%.
The Political Turning Point
The sales of the Tesla were increasing the quickest in Democratic-leaning regions prior to Musk acquiring Twitter again, in line with the overall pattern of electric vehicle uptake being the most pronounced among liberal consumers. That, however, changed incredibly in October 2022. The researchers utilized county-level vehicle registration data to the month of March 2020 to April 2025 to implement a difference-in-differences model to trace the popularity divergence of Tesla along partisan lines.
Their findings are stark. Following the move of Musk into partisan politics, characterized by lax moderation politics on X, personal assaults on liberal personalities, and explicitly conservative communications, Democratic counties started to abandon Tesla. The research claims that the moves of Musk have antagonized his most loyal customer base, and Tesla has lost its relative sales performance in those areas significantly.
A Shift Without a Substitute
Although Tesla experienced a decline in sales, there was a growth in the sales of electric and hybrid vehicles in the market. The experiment shows a near one-to-one substitution, that is, a Tesla that was not bought was probably bought by a buyer of another EV or hybrid. The presence of rival products in the market by Ford, GM, Rivian, Hyundai, and Kia increased sales by 17-22% as a direct outcome of the shrinking Tesla brand.
That is, the clean vehicle market is booming, but not necessarily Tesla. The evidence indicates that the rhetoric of Musk not only halted the expansion of Tesla, but it also sent millions of potential buyers to the companies of competitors.
A Self-Inflicted Wound
The consequences of this work are mind-blowing. Tesla has lost more than a million sales within two and a half years; this is no small change, but a self-inflicted injury that might take years to heal. Analysts observe that the sales of EVs have increased significantly around the world at this time, but Tesla has yet to grow. The firm went to the extent of reducing the production of the already-established factories and halting new projects like Gigafactory Mexico as a result of the falling demand.
The global sales of Tesla have fallen a little, but that is just a cover for the magnitude of the lost opportunity. The growth of the EV market implies that Tesla was not supposed to be decreasing but expanding. According to the study, the U.S. sales that Tesla would have achieved monthly by the beginning of 2025 were approximately 150% greater than they would have been without the political scandals of Tesla CEO Elon Musk.
