Tesla and the identity crisis: When branding and leadership collide

For years, Tesla has been more than just a car manufacturer—it has been a symbol of innovation, sustainability, and a future where clean energy prevails over fossil fuels. But in recent months, Tesla has found itself at the center of a branding crisis, one that threatens to erode the very identity that made it so powerful.  

At the heart of the issue lies a crucial question: is Tesla truly committed to its mission of "accelerating the world's transition to sustainable energy," or has it simply capitalized on a lucrative business opportunity? 

The Tesla crisis

Tesla’s recent struggles extend beyond branding. The company has faced declining sales in multiple key markets, including the US, Australia, and various European countries. In January, Tesla’s US registrations dropped by 11%, a stark contrast to competitors like Ford and Chevrolet, which are gaining ground in the electric vehicle (EV) market.  

In Australia, the decline was even more dramatic, with sales plummeting by 71% in February compared to the previous year. Tesla sales also declined more than 40% year-on-year in Norway, Denmark, and Sweden last month, with a 26% slide in France. These declining sales have contributed to a significant drop in Tesla's stock price, which has fallen more than 50% since mid-December. 

Tesla supporters are questioning whether the company’s commitment to sustainability was ever truly authentic

These financial troubles have been compounded by CEO Elon Musk’s increasingly polarizing political stance. His association with US President Donald Trump, his involvement in the US Department of Government Efficiency (DOGE) and his support for Germany's far-right AfD party have led to significant backlash.  

In response, Tesla properties have been vandalized in multiple locations, including the US and Germany, with incidents of arson and defacement. Meanwhile, former Tesla supporters are questioning whether the company’s commitment to sustainability was ever truly authentic. Some Tesla owners have even resorted to bumper stickers to show their opposition to the CEO’s political stance, with slogans like ‘I bought this Tesla before Elon went crazy’. 

Opportunism versus conscientious leadership

Oriol Iglesias, Professor of Marketing at Esade, an expert on brand management and author of the book In Good Conscience: Do the Right Thing While Building a Profitable Business, offers a compelling perspective on the matter. He argues that while Tesla initially positioned itself as a sustainability-driven company, recent events suggest otherwise. 

“Elon Musk initially presented himself as a CEO committed to fighting climate change by promoting the transition from combustion-engine cars to electric vehicles.”, he claims. “Moreover, the fact that Tesla was a highly innovative company that disrupted many traditional industry practices gave it significant visibility and credibility.” 

“However, his recent association with Trump and the type of policies they jointly support seem to indicate that his motivation was fundamentally opportunistic: he saw a highly relevant business opportunity in the transition to electric vehicles, without necessarily having a sincere and strong commitment to the fight against climate change.” 

As consumers become more discerning, brands that fail to align their actions with their stated values risk losing credibility

This shift in perception is problematic for Tesla, which built its brand on a vision of environmental responsibility. Iglesias contrasts Tesla with what he calls “conscientious companies,” those that embed social responsibility into their corporate strategy rather than using it as a marketing tool. Conscientious branding not only enhances corporate reputation but also offers a safe harbor in moments of crisis. 

“The problem with CSR is that it is often confined to a specific department, serves as a mechanism to compensate for the negative externalities generated by the business, and remains disconnected from corporate strategy,” Iglesias explains. “Conscientious companies have an internal belief system that guides their entire strategy and operations with the goal of developing a profitable business model that is also socially responsible and has a positive impact on the planet.” 

The professor notes that leadership is a crucial element of these businesses. If Tesla were truly a conscientious company, its leadership would act consistently over time, reinforcing its moral integrity. Instead, Musk’s erratic behavior, political alignments, and business decisions suggest a different reality to consumers and investors: Tesla may be more of an exclusively profit-driven company than one genuinely committed to sustainability. 

The risks of brand dissonance

Tesla’s current identity crisis could have significant consequences. As consumers become more discerning, brands that fail to align their actions with their stated values risk losing credibility. For Tesla, this means potentially alienating environmentally conscientious customers who once saw the company as a pioneer in the fight against climate change. 

Additionally, Tesla is no longer the only major player in the EV market. Traditional automakers like Ford, General Motors, and Volkswagen are investing heavily in electric vehicles, providing consumers with alternatives that may seem less politically charged. If Tesla loses its unique appeal, it risks becoming just another car company rather than the trailblazer it once was. 

Can Tesla recover its brand?

The road ahead for the company is uncertain. Rebuilding trust will require more than just innovative cars—it will demand consistent actions that align with its stated values. For now, Tesla’s branding dilemma serves as a cautionary tale for businesses worldwide: a strong brand is built not just on words, but on sustained and authentic commitment. If Tesla fails to align its leadership with its original mission, it may lose the very thing that set it apart in the first place.