Feb 11, 2022 - Economy

Tesla loses its approval from the left

Illustration of a gas gauge indicating left and right

Illustration: Sarah Grillo/Axios

Tesla is losing its status as a liberal darling.

Why it matters: CEO Elon Musk's electric vehicle maker generated a legion of liberal fans ages ago for its full-throated contribution to the fight against climate change.

The intrigue: Tesla has angered progressives on several occasions in recent months, as the company faces accusations of racism, anti-unionism and conservative positioning on COVID-19.

  • California sued Tesla this week, accusing the company of enabling a racist work culture, slurs and discrimination.
  • Musk last year moved Tesla’s headquarters to Texas after repeatedly complaining about California’s business environment, including its pandemic restrictions.
  • Musk criticized COVID-19 vaccine mandates, which Democrats widely favor, though he is personally vaccinated.
  • Musk has also sparred with prominent Democrats, calling President Biden a "🧦 puppet in human form" on Twitter and noting that the president had been "unable to say the word ‘Tesla.’” He's also mocked progressive icons such as Sens. Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont.
  • The National Labor Relations Board accused Tesla of intimidating prospective union organizers, which the company denied. Tesla’s workers are not unionized, unlike GM and Ford employees who are represented by the United Auto Workers union, which Musk has repeatedly blasted as corrupt.

Tesla, which has eliminated its public relations department, did not respond to a request seeking comment.

Threat level: Taken together, the developments threaten to dampen enthusiasm for the Tesla brand among progressive loyalists.

  • “There’s a lot of downside risk,” says Witold Jerzy Henisz, a University of Pennsylvania management professor and leader of the Wharton Political Risk Lab. “It’s a risk for any company to alienate a substantial portion of its consumer base, potential workforce and potential investors.”

Yes, but: Demand for Tesla vehicles shows no signs of abating. The company’s vehicle sales rose 71% to 308,600 in the fourth quarter, compared with a year earlier.

  • “Every time I’ve said ‘this is it’ for them, I’ve been wrong, so I’m not saying that anymore,” Autotrader analyst Michelle Krebs says. “It does seem like Tesla is Teflon.”
  • “I would think it would take something bigger than what we’ve seen to knock him off the pedestal,” Henisz says of Musk.

What we’re watching: Whether Tesla’s relationship with the White House thaws after Biden broke his silence on Tuesday, mentioning the company for the first time during his presidency — albeit in an off-hand reference to the automaker as one of many that have announced U.S. investments since he took office.

  • Transportation Secretary Pete Buttigieg told CNBC on Wednesday, “We admire the range of American companies that have innovated, including Tesla, which did so much to make EVs possible in America.”

The bottom line: Tesla’s political drift hasn’t disrupted its business, at least not yet.

Editor’s note: This story has been corrected to note Pete Buttigieg heads the Department of Transportation, not Treasury.

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