Sales are falling, boycotts are rising and, as I write, the share price has plummeted 40% since the Trumpian high watermark of December 2024 (and before February’s sales figures reveal the full impact of the DOGE blowback). Tesla is turning into a case study of brand vandalism, illustrating the risks to shareholders of inextricable associations with a charismatic founder/CEO, who then turns rogue.
We have long observed it takes years to build a brand leader, but only a few days to destroy one. And Tesla isn’t even the first brand Musk has trashed. Twitter no longer exists, despite many hard-core users still refusing to refer to it as X, Musk’s worryingly Orwellian rebrand. Alienating loyal customers is an indulgence only the richest of men can afford and, while X is now pandering to a new base, it is worth nothing like the $44bn Musk paid for it. And users still post ‘tweets’.
Tesla and X prove the world’s highest paid engineer is no marketing genius. He has pursued cult popularity with an audience - who will probably never buy his cars - while showing contempt for the values his customers aspired to. Who is going buy a Tesla now that the brand’s leitmotiv is ‘Swasticar’? Andrew Tate, maybe? Someone Musk has suggested would be a good UK Prime Minister.
While Musk’s mercurial and increasingly irresponsible behaviour and outlandish opinions are corroding Tesla’s brand reputation, he is not the first to trash his own brands.
‘Doing a Ratner’
For those with long memories, Gerald Ratner is synonymous with the destruction of Ratners, once the largest jewellery retailer in the UK, with 2,300 stores across the country. In 1991, at an Institute of Directors presentation at the Albert Hall, he tried some jokes to explain his success, referring to his products as ‘total crap’ and a pair of earrings as ‘cheaper than an M&S prawn sandwich’. His jokes backfired and plunged the company into the red as customers fled, with the loss of many shops and jobs and the eventual rebranding of the company as Signet Group two years later. His actions are enshrined in the phrase ‘doing a Ratner’ which has tarnished his reputation forever.
Recovering from brand blowback
Abercrombie and Fitch is a retailer with 130-year history, and a favourite of Theodore Roosevelt and Ernest Hemingway, amongst others. By the 1990’s the brand’s success meant you could find a store in every shopping mall until its CEO, Mike Jeffries' homo-erotic brand positioning and appaling personal behaviour trashed the brand’s long-established reputation, attracting accusations of racism, bullying and even sexual exploitation.
By 2016 Abercrombie & Fitch was voted America’s ‘most-hated retailer’ with inevitable consequences for the business. Two years later the full story of Mike Jeffries leadership was revealed in a Netflix documentary, 'White Hot', and the share price fell through the floor. Jeffries now awaits trial for sex trafficking and prostitution, but this is not the end of the story.
Under new management, between 2019 and 2023 the brand quietly repositioned itself and targeted new younger customers. It was able to rebuild its brand reputation, becoming the best performing stock on the S&P index in 2023, recovering to $4bn in revenues and even out-performing chip maker Nvidia that year. By md-2024 the stock reached an all-time high, from which it has fallen back, but analysts still rate Abercrombie & Fitch as a ‘buy’.
Like Abercrombie & Fitch, Tesla is fortunate not to feature its CEO in its brand name, so there is still a chance its board might save the brand and distance it from its increasingly unhinged CEO. However, like all good oligarchs, Musk has surrounded himself with yes-men and few will be brave enough to tell the richest man in the world what to do, until he isn’t.
With much of Musk’s wealth tied-up in the value of his Tesla shares, that might not be so far into the future…
Peter Matthews
Founder & CEO
David Gilbert
Head of Brand Consulting