Tesla’s crisis isn’t just about sales figures. It’s about what happens when a company becomes inseparable from its CEO’s identity. Once the world’s most valuable car brand, Tesla is now facing a self-inflicted trust crisis. It isn’t being crushed by its competition but by its leadership.

I recently wrote about Tesla’s drop in sales in a short Facebook post that went viral, sparking thousands of reactions and hundreds of heated comments from people across the world. The sheer intensity of the debate showed just how polarising Tesla has become. As someone who studies consumer behaviour and customer trust, I’ve seen how great brands rise—and how they fall when trust is eroded.

It made me think—how did it get here? Tesla stood for innovation, sustainability, and the future of mobility. It was a movement. But when a brand is built on ideals, those ideals must be maintained. The moment customers feel those values are compromised, trust collapses.

Competition is playing a role, of course, but this is about something deeper: trust, reputation, and the dangers of turning a CEO into a brand.

The CEO-as-Brand Trap

In today’s world, CEOs aren’t just leaders—they are the brand. Their words, decisions, and public presence define how customers perceive the company. This isn’t new. Henry Ford and Walt Disney had a similar influence. The difference? Their impact was rooted in legacy, not real-time social media influence.

Elon Musk took a different approach. He turned Twitter (now X) into his personal stage, merging Tesla’s identity with his own. It worked for a while. His bold ideas, risk-taking, and unfiltered style made Tesla feel revolutionary. Then, things changed. Controversies started piling up. Instead of strengthening the brand, Musk’s actions became a risk factor.

 

The backlash Tesla faces now is similar to what Disney experienced when it clashed with Florida lawmakers over the ‘Don’t Say Gay’ bill. But there’s a crucial distinction: Disney’s activism was built around its brand values.

Tesla’s backlash isn’t because of a stance—it’s because Musk’s unpredictability has become the stance.

I wrote about brands like Nike, Patagonia, and Ben & Jerry’s taking a stand on social issues in my book Journey to Centricity. Of course, these brands faced backlash and may have alienated some customers, but they gained loyalty from others. The problem is that Musk’s engagement isn’t about corporate values, it’s about personal ideology. And that’s where things get complicated. The real problem here isn’t Musk’s politics (maybe) but his inescapable link to Tesla’s brand.

Business leaders must ask themselves: is my personal brand enhancing the company, or is it distracting from it? The moment customers feel the CEO’s personality outweighs the company’s mission, the brand enters dangerous territory.

The Reputation Crash

The brand that once symbolised progress, sustainability, and the future now appears unpredictable. Customers are taking notice and looking elsewhere.

Let’s break it down.

Musk’s acquisition of Twitter (X) turned away a significant part of Tesla’s audience. Ofcom reported that the UK usership of X has fallen by 4 million since Musk’s takeover.

Many progressive, environmentally conscious customers once saw Tesla as a company that represented the future. Now, Musk’s public feuds, anti-EU stance, and endorsements of far-right figures, including Germany’s nationalist AfD party, have positioned Tesla as a brand at odds with many of its original buyers. European consumers are thoughtful in their choices. They don’t just purchase a product. They invest in what the brand stands for.

Many now feel that Tesla no longer aligns with their values.

That said, Musk’s shift to the right could have an unintended effect, that of expanding the EV market to previously skeptical conservative buyers. His political stance may help “detoxify” electric cars for MAGA enthusiasts.

Tesla’s story proves that tying a company’s identity too closely to one leader can be a double-edged sword. If the CEO falters, the brand suffers.

Losing Loyal Customers

When people start labeling your vehicles as “swasticars,” your brand might have an image issue. Some Tesla drivers now display stickers on their cars that read, “I bought this car before Elon went crazy.” Even Tesla employees are looking for ways to separate themselves from Musk’s influence.

Tesla’s shift isn’t just about sales, but it’s becoming part of a broader cultural reaction.

• In The Hague, protesters spray-painted anti-fascist slogans on a Tesla showroom.
• In Gothenburg, Sweden, four Tesla vehicles were set on fire.
• In London, the group “Everyone Hates Elon” has been running anti-Tesla campaigns.

The company has become a symbol of division, and as the EV market becomes more crowded, that’s a major liability. Tesla is experiencing the Horn Effect, a psychological bias where one negative trait or association overshadows everything else. Just as the Halo Effect makes people view a brand more favourably because of a positive impression, the Horn Effect does the opposite, distorting perceptions through a negative lens.

Musk’s polarising actions are no longer just his own, they are Tesla’s.

Is This the Fall of an EV Giant?

While EV adoption is rising across Europe, Tesla’s annual sales in Europe declined: Spain: -75.4% | Germany: -59.5% | France: -63.4% | Sweden: -44.3% | Norway: -37.9%

The issue isn’t just competition—it’s trust: Musk’s erratic leadership, political alliances, and unpredictable decisions have tainted Tesla’s brand. This is what happens when a CEO’s persona overshadows the company itself.

The data supports this shift:

Brand Finance reports that Tesla’s brand value has dropped 26% in a year. It fell from $58.3 billion in early 2024 to $43 billion in early 2025.

That’s a $15 billion decline.

Meanwhile the Competition…

Tesla’s lineup is aging. With no new models in Europe since the Model Y in 2021, its offerings now lag behind fresher, more competitive alternatives. Meanwhile, rivals are surging ahead. Volkswagen and BMW lead in premium EV sales, while Chinese brands like BYD are aggressively expanding with advanced, cost-effective models. BYD’s integration of DeepSeek AI into its vehicles gives it a major edge in China, further widening the gap.

Polestar, the Swedish EV brand, is capitalising on Tesla’s decline, actively courting disillusioned Tesla owners. CEO Michael Lohscheller recently confirmed a surge in interest from former Tesla customers, noting, “A lot of people have very, very negative sentiment.”

Back in 2021, when I interviewed Polestar’s former CMO, it was clear the company wasn’t just building cars but crafting an experience. Polestar had already invested heavily in high-tech innovation, refined customer service, and premium brand identity—all areas where Tesla is now faltering.

Tesla’s Trust Deficit

The Trust Deficit is real here. It’s a concept that I covered in my LinkedIn Learning course.

Every company operates with a “trust” bank account. When customers first engage with a brand, they begin with a balance of trust. Every positive experience, reliable product, and fulfilled promise adds to that account. When customers experience quality issues, poor service, or erratic leadership, they make withdrawals from that account. When withdrawals outpace deposits, trust runs low. Tesla once had a strong trust balance. Now, the company is at risk of exhausting that goodwill.

• Production inconsistencies have frustrated customers in markets that expect precision.
• Repeated price adjustments have led to dissatisfaction and lower resale values.
• Mass layoffs in Europe have raised concerns about stability.
• Activism backlash and erratic behaviour

As Bill Gates bluntly put it, Musk’s involvement in global politics was “insane shit.”

Tesla’s trust erosion isn’t an isolated incident. It follows a well-documented pattern in business psychology: when corporate leaders create uncertainty, consumer confidence declines.

Can Tesla Fix This Mess?

Customers need reasons to stay with Tesla rather than switch to a competitor.

1. Distancing Tesla from Musk’s Personal Brand

Tesla must establish a distinct corporate identity, but this is easier said than done. Musk’s 13% stake and his grip on a historically compliant board mean any rebranding effort would require his approval, a paradox for a company needing to escape his shadow. Until governance shifts, even a new CEO would struggle to redefine Tesla’s narrative.

2. Control the Narrative

Tesla needs to define its core values beyond Musk’s personal ideology. Patagonia and Nike waded into activism with a clear, long-term strategy aligned with their brand values. Tesla, by contrast, is being pulled into ideological battles that do not align with its original mission. The lesson? Don’t let your company get dragged into controversy without purpose. If you take a stand, make sure it aligns with your long-term brand identity. Otherwise, you risk alienating customers with no meaningful upside.

3. Rebuilding Trust Through Actions

To win back confidence, Tesla must shift the focus back to innovation, customer experience, and redefining the brand beyond Musk. That means establishing a stronger corporate voice. Customers don’t just want promises—they want proof. Past successes won’t protect you from market shifts. If you stop innovating, customers will find someone who hasn’t. The easiest way to lose trust is to overpromise and underdeliver. The fastest way to rebuild it is through tangible action.

The Bottom Line

The competition is heating up. Consumer preferences are shifting. Tesla’s greatest asset—its brand—has turned into its biggest liability. No brand is immune to trust erosion. A CEO’s reputation influences business outcomes. For years, Musk positioned Tesla as the car of the future. But Tesla’s future may look a lot like just another automaker, struggling to stand out. In the CEO-as-brand era, leadership decisions shape market success. Strong personal branding can elevate a company, though a mismanaged identity can create lasting setbacks.

What do you think?

▶︎ Could Musk’s persona still benefit Tesla in certain markets or has the cult of personality burned too many bridges to rebuild?

Ilenia Vidili is a globally recognised customer-centricity advisor, keynote speaker, and author with over 15 years of experience helping businesses bridge the gap between their operations and their customers. Over her tenure in the corporate world, she worked with multinationals like NEC, Bayer, and ARM, as well as a number of start-ups.