A Yale University study estimates that Elon Musk's partisan political activities since 2022 have reduced Tesla's U.S. sales by 1 to 1.26 million vehicles. The research highlights how Musk's actions alienated Democratic buyers, Tesla's core customer base, while boosting competitors' electric vehicle sales. Despite this, Tesla's focus on AI and autonomous technology offers potential recovery paths.
Researchers at Yale University, led by energy economist Kenneth Gillingham, published a working paper through the National Bureau of Economic Research quantifying the impact of Elon Musk's political involvement on Tesla's business. The study estimates that Musk's acquisition of Twitter (now X) in October 2022, his $300 million in donations to Republican candidates, leadership of the White House's Department of Government Efficiency (DOGE), and support for President Donald Trump cost Tesla between 1 million and 1.26 million additional U.S. vehicle sales from October 2022 to April 2025. This represents a 67% to 83% higher sales figure without what the authors term the "Musk partisan effect."
The analysis shows sales declines became evident from mid-2022, particularly in Democratic-leaning states and counties. "Musk's actions antagonized his most loyal customer base, for, as we show, Democrats are far more likely than Republicans to purchase a Tesla," the researchers wrote. Democrats reversed their increasing purchase trend post-Twitter acquisition, while Republican buying remained steady, leading to a net loss despite any gains from the latter group. This shift also increased competitors' electric and hybrid vehicle sales by 17% to 22%.
The study notes broader implications, including setbacks to California's zero-emissions vehicle goals; the state would likely have met its 2026 targets without the effect. Tesla registrations in California fell 9.4% in the third quarter, with market share dropping to 46.2%.
Musk announced in May that he was stepping back from DOGE. Tesla reported third-quarter earnings of $1.4 billion, down 37% year-over-year, with vehicle sales falling 1% in 2024 amid a 7% rise in overall EV sales. The company's stock dropped 27% in February but has risen 14% year-to-date, buoyed by optimism in robotaxis, autonomous driving, and AI-powered robots. Wedbush Securities analyst Dan Ives estimated the AI and autonomous opportunity at "at least $1 trillion alone for Tesla."
Tesla board chair Robyn Denholm urged shareholders to approve Musk's potential $1 trillion compensation package over a decade, stating, "Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become: a transformative force reimagining the fundamental building blocks of mobility, energy and labor." Tesla did not respond to requests for comment on the study.
