Tesla “just not cool” anymore in car-crazy California

Mark Hertzberg/ZUMA/Alamy via Reuters

There are only two topics of conversation at Los Angeles drinks parties: Kamala Harris and Elon Musk. Reactions are wildly different.

The California born Democrat presidential nominee appears to be universally loved, regarded as the best shot to save the country from another Donald Trump term.

The multi-billionaire founder of Tesla and owner of social media platform X, on the other hand, is seen as a brilliant entrepreneur and technologist who has gone rogue with his endorsement of Republican candidate Trump.

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It is as sure as can be that California will go for Harris in November’s election, but Musk’s new political stance threatens to worsen the pressures he is increasingly under in the state, which has been the bedrock of his success with Tesla.

New Tesla sales are down for the third consecutive quarter, according to industry surveys, falling by 24 per cent in the second quarter. That is bad news in a state that accounts for 10 percent of global Tesla sales.

Comparatively high prices (despite recent cuts), increased competition from traditional manufacturers, some new entrants, plus Musk’s polarising personality have all contributed to the fall.

Jonathan, a self-confessed car enthusiast and owner of a Tesla 3 bought seven years ago when the car was a must-have, told me he would never buy another Tesla.

“I’m as environmentally conscious as most people here, but I didn’t really buy it because I wanted to save the planet. Back then, Tesla was just so cool. Now it’s aged, and Elon has run out of ideas,” he said.

Tellingly, he has two other cars – gas guzzling LandRover SUVs – and rarely even drives the Tesla these days.

The Arabian Gulf has a direct interest in how Tesla’s decline pans out

A lot of Californians seem to have reached the same conclusion. Tesla is still the market leader in EV motoring in the state, but overall sales of EVs are flat or falling, with hybrid petrol-electric cars gaining ground. And Tesla is declining faster than the state average.

I’ve been coming to LA regularly for the past three years, and have in that time conducted my own informal survey on the busy Interstate 110 freeway – LA’s main arterial route (often clogged).

A couple of years ago, during the recovery from the pandemic that turned LA’s freeways into ghost roads, around one in every five vehicles was a Tesla, I calculated. On a drive to the south of the city last weekend, it was roughly one in 20. A crude assessment, but it should give Musk some concerns.

His latest product, the Cybertruck, was even less in evidence. In five days of driving the city’s freeways, I saw only one of the futuristic SUVs on LA’s roads. Maybe they’re all kept wrapped up in garages.

But it’s just as likely that Californian drivers are taking revenge on Musk after his recent attacks on the state, with plans approved to move Tesla’s incorporation to Taxas, as well as shifting the HQs of X and SpaceX.

Tesla’s new unpopularity is good news for other car manufacturers, and the Arabian Gulf has a direct interest in how the decline pans out.

I saw quite a few pick-ups and SUVs made by the Rivian company, backed by Saudi conglomerate Abdul Latif Jameel, which has recently received a $5bn injection from Volkswagen of Germany. And pretty stunning they looked too.

Meanwhile Lucid, the up-market EV designed and manufactured by executives who left Tesla, continues to swallow investment from Saudi Arabia’s Public Investment Fund. CEO Peter Rawlinson said recently that the car was nearing “escape velocity” from the cycle of losses and PIF cash injections.

But I have to report that you will see more Lucids in Riyadh than you will on the streets of Los Angeles. I did not see one in my informal EV census – but then I didn’t make it to Beverly Hills, the brand’s target market.

Overall, the dominant model mix on LA’s roads were South Korean or Japanese sedans, often hybrid, fighting for space with big American SUVs and pickups. European sedans and SUVs like Mercedes and BMW were also much in evidence.

In this increasingly competitive market, in car-crazy California, Musk’s prospects look limited. 

“He’s just not cool anymore,” said Jonathan.

Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He acts as a consultant to the Ministry of Energy of Saudi Arabia and is a media adviser to First Abu Dhabi Bank of the UAE