It\u2019s probably not a good idea to alienate your core constituency with extracurricular political activities if you\u2019re a CEO<\/p>\n<\/blockquote>\n
\u2014 Kenneth Gillingham, Yale<\/p>\n
A new study from Yale researchers has put meat on that bone. They found that Musk\u2019s partisan behavior has cost Tesla as many as 1.26 million car sales<\/a> since October 2022. That\u2019s when Musk acquired the social media platform Twitter and gave greater access on it to the far right and other extremist voices.<\/p>\n Musk intensified his partisan journey during the run-up to the 2024 presidential campaign, when he heavily funded Donald Trump\u2019s reelection campaign, and after Trump\u2019s inauguration, when he launched the DOGE service, which strewed chaos throughout the federal government by instituting mass layoffs purportedly in the name of budget-cutting.<\/p>\n Get the latest from Michael Hiltzik <\/p>\n What the sales numbers say is that \u201cit\u2019s probably not a good idea to alienate your core constituency with extracurricular political activities if you\u2019re a CEO,\u201d says Kenneth T. Gillingham, an economics professor at Yale\u2019s School of the Environment and lead author of the paper. <\/p>\n The Yale researchers\u2019 analysis of sales figures show that Tesla sales were stronger in Democratic-leaning counties than in Republican counties \u2014 until October 2022, when they began to plateau in Democratic areas and then began to fall. Tesla sales rose in Republican areas after that break, but not enough to offset the Democratic decline. <\/p>\n The partisan divide in EV sales has been widely studied<\/a>. Republican and conservative car buyers have never been a target market for EVs generally, and Teslas particularly.<\/p>\n EV sales as a share of all vehicles in 2012-2022 showed a marked relationship with statewide partisan voting, with blue states leading red states in EV sales.<\/p>\n (UC Berkeley Energy Institute)<\/p>\n The Yale study also found that overall EV sales in the U.S. continued to rise after October 2022, benefiting non-Tesla makers of EVs and gas-electric hybrids at virtually a one-to-one rate\u2014those products gained by about 1.26 million sales above what they would have been without the Musk effect. <\/p>\n I asked Tesla to comment on the Yale findings, but haven\u2019t received a reply.<\/p>\n The Yale study points to the effects of CEO outspokenness for good or ill, especially when their topics have little or nothing to do with their companies\u2019 direct interests. It\u2019s one thing to go public with concerns about corporate taxes or tariffs, quite another to divagate into divisive political issues such as global warming or anti-LGBTQ discrimination.<\/p>\n The researchers also point to the Musk effect\u2019s implications for public ecological initiatives, notably California\u2019s EV policies. California\u2019s official target is for 25% of new vehicle sales be for zero emission vehicles next, and 100% by 2035. But ZEV sales have stalled out, according to recent figures. <\/p>\n \u201cThe 2026 target was set when Tesla was rapidly increasing its sales,\u201d Gillingham told me. \u201cWithout the Musk effect, it would have been easily met. Now it looks unlikely.\u201d<\/p>\n In part that\u2019s because buyers who formerly would have opted for a Tesla have shifted to other brands, but are choosing hybrids, which don\u2019t meet the EV sales standard, rather than full electric models.<\/p>\n The study comes just as Tesla shareholders are scheduled to vote<\/a> on a pay package for Musk with an estimated value of $1 trillion. The vote will come at the company\u2019s annual meeting Thursday. <\/p>\n As I reported<\/a>, that pay package treats Musk as the sole indispensable figure in Tesla\u2019s future. But although the Tesla board members who approved the pay proposal described the milestones Musk must meet to collect the full value, the standards have been tweaked to make them more achievable than they appear on the surface. <\/p>\n Whether Tesla shareholders will ever come to see Musk as a drag on the company rather than its savior isn\u2019t currently clear, but with Tesla stock trading at a meme-level price-earnings multiple of about 320 and a market value of more than $1.5 trillion, that epiphany plainly hasn\u2019t occurred yet. <\/p>\n The effect that CEOs\u2019 political excursions have on their companies\u2019 fortunes has been debated for years. The common conclusion is that it depends on whether their statements and positions align with those of their core customer base, or flout them \u2014 whether they will \u201cbolster brand loyalty or trigger a backlash against the CEO\u2019s company, as Aaron K. Chatterji of Duke and Michael Toffel of Harvard wrote in 2016<\/a>. <\/p>\n Chatterji and Toffel examined the impact of several CEOs\u2019 criticisms of Indiana\u2019s Religious Freedom Restoration Act of 2015, which expanded the ability of defendants in civil lawsuits, including those alleging discrimination, to cite their religious beliefs as justification for their actions.<\/p>\n Among the law\u2019s public critics was Apple CEO Tim Cook. Chatterji and Toffel found that Cook\u2019s statement that the law might foster anti-LGBTQ discrimination reduced public acceptance of the law significantly, and even increased the popularity of Apple products. Other corporate leaders have spoken out in favor of international initiatives to fight global warming.<\/p>\n Such forthright commentary about current events and issues are rare, however. The reason may be that it\u2019s difficult for a high-profile executive to keep track of the shifting winds of public discourse; what may appear to be a popular position at one time can draw brickbats as public opinion evolves. Corporate interests may also outweigh the desire to be heard on issues of public concern.<\/p>\n In recent years, many corporate leaders pledged to stand firm against right-wing assaults on voting rights, access to women\u2019s reproductive healthcare, diversity and democracy itself. <\/p>\n Many companies initially promised to end or review their campaign contributions to the 147 Republican lawmakers who voted against certifying Joe Biden\u2019s 2020 election victory over Trump. Over time, as it happened, many resumed their contributions<\/a>. <\/p>\n Toyota, for instance, continued to contribute to some of those politicians, explaining that it \u201csupports candidates based on their position on issues that are important to the auto industry and the company … We do not believe it is appropriate to judge members of Congress back on their votes on the electoral certification.\u201d<\/p>\n How CEO comments are received by their presumed audience can depend on their context. Salesforce CEO Mark Benioff was long regarded as an echt San Francisco liberal billionaire. But last month he came out in favor of deploying the National Guard to patrol the city\u2019s streets, evidently aligning himself with Trump\u2019s militarization of local law enforcement.<\/p>\n <\/p>\n