Investing.com - The willingness to buy Tesla's electric vehicles has noticeably changed among Democrats and Republicans due in large part to the political activities of CEO Elon Musk, according to Stifel.
Musk became one of then-presidential candidate Donald Trump's most ardent backers last year, appearing with him at campaign events and advocating for him through his social media platform, X.
Following Trump's election victory in November, Musk has turned into a powerful voice within the White House, spearheading an effort to reduce the size of the federal government through the new Department of Government Efficiency, or DOGE.
The role, as well as statements he has made in public and online, have further cemented Musk's place as a controversial figure in both American politics and business.
His actions are impacting how some carbuyers are approaching Tesla (NASDAQ:TSLA), according to the Stifel analysts led by Stephen Gengaro.
Among Democrats, who broadly oppose the Trump administration, the net favorability of Tesla has dropped to -15% from approximately 7% in February 2024, Stifel said, citing data from its proprietary Think Tank Group. For Republicans, who widely back Trump and Musk, the figure increased to roughly 27% from 11%.
"There is a clear negative shift from Democrats, while Republicans willingness to buy a Tesla is rising," Gengaro said.
Notably, the numbers found that the net purchase consideration for Teslas among Democrats sank to -42%, compared to roughly -31% in August -- when Musk first endorsed Donald Trump for a second term in the White House. Meanwhile, for Republicans, it edged up to -13% in the latest period from -26% in August.
Although Democrats have traditionally been "much more likely" to buy electric vehicles than Republicans, "Musk’s support of, and participation in the Trump administration has led to sharp backlash" from people who affiliate with the party, Gengaro said.
"This backlash has surfaced anecdotally and on social media (people placing bumper stickers on their Tesla’s claiming they love the car, but not Elon, and other variations)," and is supported through the Stifel data, Gengaro noted.
He said the potential uptick in Republican willingness to buy Tesla's offerings could partially offset the negative trend among Democrats.
Still, when coupling together Musk's role in the Trump administration and other factors like fierce competition in China and the roll-out of a new Model Y car, Gengaro flagged "some near-term headwinds" to the company's vehicle sales.
A 45.2% year-on-year drop in January sales in the European Union presented an especially "worrisome trend," Gengaro said, adding that overall battery electric vehicle sales in the region rose by 37% in the corresponding period.
This could "possibly [be] highlighting a shift in consumer preference away from Tesla toward other manufacturers," he said.