Tesla, once synonymous with innovation and dominance in the electric vehicle (EV) market, is facing mounting challenges.
The automaker’s brand value plummeted by $15 billion in 2024, a 26% drop from the previous year.
This decline underscores deepening concerns over its aging vehicle lineup, Elon Musk’s divisive public image, and intensifying competition in the EV sector.
The latest Brand Finance study highlights a stark contrast: while Tesla’s stock price has experienced significant volatility, consumer sentiment around the brand is faltering globally.
This shift reflects broader questions about Tesla’s ability to maintain its market position amid changing consumer preferences and external pressures.
The impact of stagnation in Tesla’s lineup
Tesla’s core vehicle lineup has remained largely unchanged in recent years, contributing to the erosion of its once-unassailable position.
Flagship models like the Model S and Model X, though revolutionary at launch, now face fierce competition from newer, more advanced vehicles from both legacy automakers and emerging EV companies.
While Tesla delivered approximately 1.79 million vehicles in 2024, this marked a 1% decline compared to the previous year, even as global demand for EVs surged.
Tesla’s market share in the US dropped from 55% to 49%, with brands like BYD and Mercedes-Benz gaining traction.
This stagnation highlights Tesla’s growing vulnerability in an industry increasingly defined by rapid innovation.
Tesla’s once-loyal customer base remains a key asset, with a 90% loyalty score in the US, but the automaker’s recommendation score plunged from 8.2 to 4.3 out of 10.
This suggests that while existing customers may stick with the brand, fewer are willing to advocate for it.
The Musk effect
Elon Musk’s influence on Tesla is undeniable, but his polarising public persona is increasingly seen as a liability.
Brand Finance reports that Musk’s actions, from political endorsements to controversial remarks, have significantly impacted consumer perceptions.
Tesla’s scores for consideration, reputation, and recommendation declined across major markets, including the US, Europe, and Asia.
In Europe, where Tesla once enjoyed substantial brand equity, its consideration score dropped from 21% to 16% over the past year.
This decline coincides with Musk’s divisive statements and political affiliations, which alienate certain demographics of potential buyers.
The CEO’s penchant for controversy has created a unique challenge: while some remain ardent supporters, others have grown wary of associating with the Tesla brand.
This tension is reflected in broader consumer attitudes.
Tesla’s brand strength index, which measures factors like reputation and consumer loyalty, fell from just over 80 to under 65 in 2024.
Without a significant shift in strategy, Tesla risks alienating key segments of its market, further eroding its competitive edge.
The path ahead for Tesla
Tesla’s decline in brand value has opened opportunities for competitors.
Toyota, valued at $64.7 billion, now leads the global automotive brand rankings, followed closely by Mercedes-Benz at $53 billion.
Both brands are leveraging advancements in EV technology and broader product portfolios to outpace Tesla in critical metrics like customer consideration and recommendation.
Tesla’s limited model refreshes and delays in delivering promised products, such as the Cybertruck, further hinder its ability to capitalise on growing EV demand.
As competitors continue to expand their offerings and integrate cutting-edge technologies, Tesla’s lack of diversification within its portfolio could prove costly.
For Tesla to regain its footing, the company must address these multifaceted challenges.
Developing new models, revitalising its existing lineup, and mitigating the fallout from Musk’s polarising actions are critical steps.
Moreover, aligning its corporate strategy with shifting consumer priorities, such as affordability and sustainability, could help restore its waning appeal.
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