Musk's political activity weighs on Tesla investors
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Elon Musk and other Tesla executives avoided all talk of this year's U.S. presidential election on a call with Wall Street analysts on Wednesday afternoon.
Why it matters: Investors have grown increasingly worried that the CEO's highly public political engagement is taking a toll on Tesla sales.
Driving the news: A platform that Tesla uses to gather questions from investors ahead of earnings calls shows Musk's political activity to be one of their top concerns.
- His public support for "polarizing politicians" has led to a negative perception of the brand, one user says.
- "Elon Musk has the right to express his political views, but his public activism seems at odds with his responsibility as CEO to protect shareholder value. How does Tesla address this, and can it confirm Musk's actions are not harming sales or growth?" reads another.
- "Why can't Elon stay out of politics and stop getting Tesla involved in it and tanking our shares," another user writes.
During the call, however, Musk and his team answered questions mostly about the company's autonomous electric vehicle strategy.
- That decision appears to be aligned with questions that received the absolute highest number of votes from other shareholders on the platform, based on an Axios analysis. There were thousands of votes for the ones asked, compared to hundreds of votes for the questions about politics.
- A spokesperson for Tesla did not immediately respond to request for comment.
The big picture: Separate reports and surveys suggest that Tesla's brand perception has been diminished by Musk's growing right-wing rhetoric.
- Customer loyalty remained strong in the first half of 2024, however. Tesla continued to lead the automotive industry among individual brands with a loyalty rate of 67.8%, according to a study by S&P Global Mobility.
What they're saying: While Tesla and Musk have become inextricably linked, "the brand was first," Tom Libby, associate director of industry analysis and loyalty solutions at S&P Global Mobility, noted on a webinar earlier this year.
- Translation: Tesla's early head start as one of the first companies to mass produce EVs also continues to provide some insulation from competitors and any reputation risks from Musk.
The latest: Tesla turned in a remarkably strong third quarter Wednesday.
- The EV-maker and energy storage company reported 8% growth in total revenue to $25.2 billion. Net income increased 17% to $2.2 billion, which largely beat Wall Street expectations.
- Shares popped over 12% after-hours on the news, though are still down about 14% this year.
Behind the numbers: "Our cost of goods sold per vehicle came down to its lowest level ever at ~$35,100," the company said in a release.
- Tesla also got an operating margin boost (from 7.6% last year to 10.8%) thanks to regulatory credit revenues of $739 million, which was up 33% from a year ago.
