This Week’s Case: Tesla’s European Sales Drop—Boycott or Long-Term Brand Risk?

Feb 253 min read

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Four Questions to inspire decision-makers to build personal and company trust: M.E.M.O.® Map, Execute, Measure, and Optimize—The Framework for Trust and Governance.

This Week’s Case: Tesla’s European Sales Drop—Boycott or Long-Term Brand Risk? By Gui Athia.

In January 2025, Tesla experienced a significant 45% drop in European sales, with only 9,945 units sold compared to 18,161 in the same month last year. This decline reduced Tesla’s market share in new car registrations from 1.8% to 1%. Notably, this downturn occurred despite a 37% increase in the overall European battery electric vehicle (BEV) market during the same period.

However, is this a temporary boycott or the beginning of a long-term trend? And if so, can Tesla recover its market position while maintaining its reputation as an innovative tech brand?

Several factors may have contributed to this decline, including Elon Musk’s political involvement in Europe. Musk has publicly supported far-right parties, such as Germany’s Alternative for Germany (AfD), leading to consumer backlash and potential boycotts. In Germany, Tesla’s sales plummeted by 60% year-over-year, with only 1,277 vehicles sold in January 2025.

Additionally, Musk’s political endorsements have extended to other European countries, potentially affecting Tesla’s brand perception and sales across the continent. While it’s challenging to quantify the exact impact of Musk’s political activism on Tesla’s sales, the correlation between his political engagements and the decline in European sales suggests a possible consumer response to his actions.

01.Map:

Is Tesla’s sales decline a short-term boycott or a long-term shift in consumer behavior affecting the company’s Trust Pillars?

02.Execute:

What strategies can Tesla implement to rebuild consumer trust while balancing Musk’s political activism with the company’s market positioning?

03.Measure:

What indicators should be tracked to assess whether Tesla’s brand perception is recovering or facing further deterioration?

04.Otimize:

Can Tesla regain its status as a cutting-edge tech brand while navigating political risks and evolving consumer expectations?

*Trust Pillars are the core values and strategies that align your company’s objectives with stakeholder expectations, ensuring transparency and accountability.

Trust is the currency of sustainable business—lose it, and the cost is more than financial.

Benchmarks: Target’s DEI Rollback and Consumer Backlash: In early 2025, Target faced significant consumer backlash after retracting its Diversity, Equity, and Inclusion (DEI) initiatives. This decision led to a notable drop in foot traffic and sparked boycotts, especially during Black History Month. Civil rights activists and even members of Target’s founding family expressed disappointment, highlighting the risks companies face when altering social responsibility commitments. Kellogg’s “Let Them Eat Cereal” Controversy: In April 2024, Kellogg’s CEO suggested that families struggling with rising food prices should consider “eating cereal for dinner.” This remark was perceived as insensitive, leading to a national boycott campaign. The backlash underscored the importance of empathetic communication from leadership, especially during economic hardships. Starbucks’ Racial Bias Incident and Recovery: In 2018, Starbucks faced a racial bias scandal when two Black men were arrested at a Philadelphia store. The incident led to widespread protests and calls for boycotts. In response, Starbucks implemented comprehensive racial bias training across its U.S. stores and engaged in open dialogues with communities, showcasing a commitment to rectifying mistakes and rebuilding trust.

Is Tesla’s sales decline a temporary backlash or a long-term shift? Drop your thoughts in the comments!

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