Tesla's brand damage is permanent
A cautionary tale of when visionaries become liabilities.
In the annals of corporate brand catastrophes, there's the infamous Ratner moment, when Gerald Ratner described his own jewellery as "total crap" and demolished his company's value overnight. There's the New Coke debacle, when Coca-Cola tried to reinvent perfection and created revulsion instead. And then there's the slow-motion train wreck that is Tesla under Elon Musk, a brand erosion so comprehensive that it feels less like a corporate stumble and more like watching someone set fire to their own house while insisting it's actually a brilliant new heating solution. It's not just a cautionary tale, it's weird performance art with a trillion-dollar price tag.
Tesla was a trendsetter
In the distant past of 2012, Tesla represented something genuinely revolutionary. When the Model S launched, it was a wake-up call to an automotive industry that had been hitting the snooze button on electric vehicles for decades. It wasn’t another Nissan Leaf to be routinely mocked as an eco-mobile car facsimile for the environmentally friendly, but a status symbol for the environmentally conscious with money.
The company's early history reads like a Silicon Valley fairy tale with a compelling subplot of industrial defiance. Founded in 2003 by Martin Eberhard and Marc Tarpenning (notably not by Elon Musk, as many believe), Tesla was out to prove that electric vehicles were not just different but could be better than their gas-powered counterparts. When they unveiled the Tesla Roadster in 2008, it was a statement of intent; an electric sports car that boasted a 245-mile range and could accelerate from 0 to 60 mph in under 4 seconds.
Tesla changed how vehicles were sold directly to customers, how they were updated through software downloads, and how they incorporated minimalist interior design centred around touchscreens. By 2018, the Model 3 was the best-selling luxury car in America, outpacing brands like BMW, Mercedes, and Audi that had dominated the segment for generations.
But trendsetters sometimes fall from their pedestal to become cautionary tales. Just look at Kodak, Blockbuster, or BlackBerry. Tesla's problem wasn't that it failed to innovate, but that it succeeded too well at making itself synonymous with one increasingly problematic person.
The Cult of Elon
There's a big difference between having a charismatic leader and becoming a cult of personality. Apple had Steve Jobs, Virgin has Richard Branson, and Microsoft had Bill Gates. All CEOs that were instrumental to their companies' success, but who also built organisations that could outlast them. When Jobs died in 2011, Apple continued on in the hands of Tim Cook to become the largest company in the world by market cap, with Microsoft nipping at its heels in second place under the stewardship of Satya Nadella. They didn't implode because they had ingrained institutional values and an identity that transcended any single individual.
By contrast, Tesla hasn't just been led by Elon Musk, it has been wholly consumed by him. After investing in the company’s Series A funding round in 2004, Musk has gradually increased his influence, becoming chairman in 2004, CEO in 2008, and eventually the living embodiment of the entire brand. The overlap between Tesla enthusiasts and Musk acolytes grew until they became practically indistinguishable from each other.
And this worked spectacularly well, until it suddenly didn't. When Musk's public persona was a quirky genius challenging the status quo, his association elevated Tesla. But brands tied to individuals carry the unique risk of rising and falling with the public perception of that person. For every positive success story, there is an Adam Neumann (WeWork), Travis Kalanick (Uber), or Elizabeth Holmes (Theranos); infamously ousted for bad behaviour, forced out by investors, and indicted for fraud respectively. And Musk's public persona has undergone a transformation that brand managers will study for years, morphing from "eccentric visionary" to "that weird relative who discovered conspiracy theories during lockdown and now won't stop sending you links at 3AM."
For a while, Tesla stood for innovation, environmental consciousness, and technological advancement. But as Musk's Twitter (now X) presence grew more erratic and his political statements more divisive, the Tesla brand began to be overshadowed by the Musk brand. And the Musk brand was increasingly defined by impulsive behaviour, right-wing political commentary, and an adversarial relationship with the press. Qualities that put him at odds with Tesla's core customer base; affluent, environmentally conscious, and largely progressive consumers.
In the luxury car demographic, perception is everything, and Tesla's is rapidly changing from "a visionary company building the future" to “that car company owned by the guy who won't stop whining and breaking things."
Tesla is everything and therefore nothing
If you asked ten Tesla fanatics in 2021 why the company deserved its stratospheric valuation, you would get ten different answers. That it wasn't just a car company, it was actually a tech company, a software developer, an energy company, insurance provider, robotics researcher, AI supercomputer, and a battery manufacturer. It was going to revolutionise energy storage, autonomous driving, solar power, and possibly even human consciousness if you caught the right Reddit thread on a good day.
This overloaded superposition of potential business models allowed Tesla to achieve a market capitalisation that peaked at over $1.2 trillion in November 2021, as it was simultaneously valued as a car company, tech company, energy company, and possibly a future interplanetary transportation service. This was more than Toyota, Volkswagen, Mercedes-Benz, BMW, and General Motors combined. It's like claiming your kitchen blender should be valued as a culinary device, modern art installation, and potential spacecraft component all rolled into one. The problem with being valued as if you're going to disrupt every industry there is, you will eventually have to actually do it, not just endlessly talk about it.
The reality is that Tesla is primarily an automotive company. In 2023, about 85% of its revenue came from selling cars and related services. That's not a criticism, making popular electric vehicles is an impressive achievement. But it does mean that Tesla should be valued like a car company with some interesting potential side projects, not like a combination of Apple, Google, and God.
The "Tesla is not a car company" mantra became a kind of magical thinking that allowed investors to justify valuations that made no sense under traditional metrics. This collective delusion was sustainable as long as Tesla kept growing rapidly and Musk kept feeding the narrative with grandiose future promises. But promises have expiration dates.
Remember the Tesla Semi Truck that was announced in 2017? It was promised for a 2019 delivery and finally began a limited rollout in late 2022. The Cybertruck that was revealed in 2019 and slated to hit the market in 2021? It started quietly trickling out almost shamefully in late 2023, with widely reported manufacturing and safety issues, and a price tag far higher than initially announced. The Roadster 2.0, also unveiled in 2017? Still waiting. The robotaxi fleet? Hasn't happened. Full Self-Driving? Still in beta after years of endless assurances that it was just around the corner. The Optimus robot? Nobody really knows, but apparently it’s going to be available to purchase for $30,000, be more significant than Tesla’s vehicle operations, and it’s going on jaunt to Mars in 2026.
Being everything to everyone means being nothing specific to anyone. And as competitors have caught up in the EV space, Tesla's identity crisis has only deepened.
The downsides of reliance on an individual
The problem with building a brand centred around a cult-like personality is that cults don't typically end well. When your organisation is inextricably linked to one person, their missteps and controversies in turn become yours.
This decline began during the 2018 mission to rescue the boys trapped in a flooded cave in Thailand. Musk offered a mini submarine to assist, which was turned down by the head of the rescue joint command centre, Narongsak Osatanakorn, for being unsuitable. In response, Musk said Osatanakorn was “not the subject matter expert” and called British rescue diver Vern Unsworth a “pedo”. It was one of the first open glimpses of his fragile ego and tendency to publicly lash out at anyone who dared question his "genius".
Musk's purchase of Twitter for $44 billion in 2022 was the real inflection point where his personal brand began actively damaging Tesla's. His decision to sack 80% of the staff, dismantle content moderation teams, restore banned accounts, engage with conspiracy theorists, and use the platform for increasingly partisan political commentary alienated a significant portion of Tesla's customer base.
The damage was immediate and measurable. Tesla's stock dropped 65% in 2022, erasing about $700 billion in market value. While some of this was due to broader market conditions, much of it reflected investor concern about Musk's divided attention and his increasingly controversial public persona.
The board that should have provided checks and balances to keep the ship sailing straight instead enabled Musk's behaviour. In 2018, they approved a compensation package worth potentially over $50 billion, the largest in corporate history. This cemented Musk's control and reinforced the notion that the normal rules didn't apply to him.
This came to a head in 2024 when Musk politically aligned himself with Donald Trump's election campaign, transforming into political operative. He didn't merely endorse Trump, he became the administration's court jester and the public face of "anti-woke" conservative politics. The spectacle reached its ridiculous climax when he appeared on stage at CPAC wielding a chainsaw, while gleefully celebrating the prospect of gutting government departments and putting civil servants out of work.
When the leader of an ostensibly progressive electric vehicle company tells you that empathy is a weakness, it creates a profound cognitive dissonance where even the most loyal Tesla customers begin questioning their allegiance. After all, it's rather difficult to feel environmentally virtuous in your Model Y when its profits are funding someone who treats climate policy as a punchline.
Musk's recent announcement that he's stepping back from his political activities at DOGE (Department of Government Efficiency) due to public pressure rings particularly hollow, given that his tenure as a Special Government Employee was time-limited anyway. The damage to the perception of Tesla is already irreparable. The man who once positioned himself as our era's ecological visionary has metamorphosed into a politically toxic, increasingly erratic figure, who's inflicted more institutional damage in months than most politicians manage in decades. It's honestly hard to remember the Musk who once seemed to genuinely care about the planet's future and was endearingly enraptured by the future of space travel rather than just his own relevance.
Tesla’s first quarter earnings call has revealed the market’s verdict that Tesla has transformed from a "paradigm-shifting technology company" into "that car company with the deeply problematic CEO everyone's tired of." Sales falling by 13%, profits collapsed an astonishing 71%, and, in the corporate equivalent of admitting defeat, the company declined to provide any forecasting for the remainder of the year. The stock that once defied gravity has been in steady free fall, with Tesla now worth nearly half of what it commanded at its peak.
The world catches up
The most damning indictment of Tesla's current state isn't what Musk has said or done, it's that the competition has also caught up. Tesla's first-mover advantage in the EV space was significant but not insurmountable. While Musk was busy tweeting about building fleets of robot taxis and establishing colonies on Mars, traditional automakers were quietly doing something revolutionary: actually building reliable electric cars people want to drive. It turns out that while Tesla was promising to reinvent transportation as we know it, companies with a century of manufacturing experience were focusing on the radical concept of meeting production deadlines and quality control standards.
Consumers shopping around for an electric car now have compelling alternatives to Tesla's lineup from nearly every major brand including Volkswagen, Ford, Hyundai, Kia, and Rivian. And they come without the heavy baggage of Musk's increasingly divisive public persona.
The numbers tell the story. Tesla's global market share in EVs has fallen from about 16% in 2020 to around 12% in 2023. In Europe in particular, Tesla's share dropped from 31% in 2019 to about 14% in 2023. In China, Tesla faces growing competition from domestic manufacturers like BYD, which has now surpassed Tesla as the world’s largest EV seller. Tesla's technological edge has also narrowed. Consumer Reports' 2023 Annual Auto Reliability Survey ranked several EVs from other manufacturers above Tesla models in reliability.
The erosion of Tesla's competitive advantage coincides with its flattening growth curve. After years of rapid expansion, Tesla's vehicle deliveries grew by just 38% in 2022 and 18% in 2023. Still respectable numbers for a traditional automaker but disappointing for a company being valued as a high-growth tech stock.
The prognosis
Is Tesla's brand damage truly permanent? Nothing in business is irreversible. Burberry shed its "chav check" image, Apple survived its wilderness years, and Netflix pivoted from DVD rentals to streaming dominance. But Tesla's wounds cut deeper than a temporary PR crisis or product misstep.
The company's fate hinges on whether it can transform itself to shed its Musk-shaped exoskeleton and reveal an institution with a clear strategic soul underneath. The odds currently don’t look good. Tesla has only known the Musk-era, and seems prepared to double down on it. The company's embarrassing 2023 "We're Not Just a Car Company" campaign felt like a desperately shallow attempt at recapturing the narrative magic of earlier years.
For Tesla to survive, it must define itself through tangible achievements rather than endless empty promises. It must recognise that in the automotive world, reality isn't subjective, it's measured in range, reliability, and residual values.
The true ironic tragedy irony of Tesla isn't that it failed, it's that it succeeded too well at its original mission. It created the blueprint of making electric vehicles objects of desirable rather than just ecological necessities, and provided evidence that the consumer demand existed. In doing so, it invited competition from companies with decades of manufacturing expertise and established brand loyalties who are now sprinting up its flank.
There's nobility in that kind of successful disruption and Tesla may have extraordinarily and permanently altered the automotive industry's DNA, even if it renders itself ordinary in the process. A trillion-dollar valuation was absurd, but Tesla's cultural impact was genuinely priceless.
In the meantime, Tesla now serves as a business school case study in the dangers of corporate personification. Companies exist within social ecosystems, and when your brand becomes divisive it ceases being a product and becomes a statement. People buy luxury cars to feel good about themselves, not to start arguments at dinner parties.
If there's a path forward for Tesla, it requires the humility to acknowledge that being a successful car manufacturer is achievement enough. It doesn't need Mars colonies, humanoid robots, or brain implants to justify its existence. It simply needs to build exceptional electric vehicles that people covet, trust, and enjoy. Detaching itself from its figurehead won't be easy, but history is littered with examples of companies that successfully outgrew their founders.
The Tesla that emerges from that transformation will inevitably be different. One that is judged on and valued for its products and reputation rather than promises and potential. And that reckoning with reality might be the healthiest possible outcome for everyone involved; shareholders, customers, employees, and even Elon Musk himself.