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Tesla‘s Brand Crisis:
When Founders Become Liabilities
Tesla’s Brand Crisis — A Tale of Two Companies
In 1982, Johnson & Johnson faced a crisis when someone laced Tylenol bottles with cyanide. Instead of deflecting blame, J&J pulled products from shelves, warned the public, and introduced tamper-proof packaging. Leadership’s decisive actions strengthened their reputation for trust and safety.
Compare that to Uber. In 2017, a toxic workplace culture and leadership scandals led to customer backlash and an investor revolt. To salvage the brand, the board ousted its high-profile founder, Travis Kalanick.
The lesson? A leader’s actions can make or break a brand.
Which brings us to Tesla’s brand crises.
From Visionary to Liability: The Elon Musk Effect
Owning a Tesla was once a declaration of forward-thinking optimism. It meant you cared about the environment, believed in the future of technology, and had a taste for innovation. Tesla wasn’t just a car, it was a movement.
Today, the brand is more associated with Elon Musk’s controversies than cutting-edge technology. Customers who once proudly drove their electric cars are now peeling off the badges or trying to trade the cars in, not because they suddenly dislike their automobile, but because they don’t want to be associated with Musk and what he represents.
Tesla’s Wild Ride as an Investment
Since its 2010 IPO, Tesla’s stock has soared, peaking in 2021 with a $1 trillion valuation, Making it one of the most valuable companies in the world. But Musk’s erratic behavior, public spats, conspiracy theories, and political entanglements have shaken investor confidence. The stock has lost ground, and many now wonder if Tesla’s future is too tied to one unpredictable individual.
Brands That Suffered from Founder Controversy
This isn’t new. Brands have suffered due to controversial founders before:
Papa John’s: A CEO’s Words Cost Millions
- Papa John’s: The pizza giant was booming until its founder, John Schnatter, made racially insensitive comments and was forced to resign. Regardless, the damage was done, and sales plunged 16%. As of November 2024, North American same-store sales are still down 6%.
MyPillow: When a Simple Product Becomes a Political Statement
- MyPillow: What was once a simple pillow brand became a polarizing political statement. Retailers such as Walmart, Bed Bath & Beyond, and Kohl’s ceased carrying MyPillow products, leading to a $100 million loss in annual revenue.
4 Steps Tesla Must Take to Recover
So How Can Tesla Overcome its Brand Crisis?
Tesla has urgent work to do if it wants to maintain its dominance.
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Separate the Brand from the Man
The first step is simple but critical: Elon Musk needs to take a step back. The company needs strong, independent leadership that can steer the brand away from controversy and back toward its original mission.
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Restore the Brand’s Core Identity
Tesla must remind customers why they first fell in love with the brand. It’s not about politics or online spats; it’s about cutting-edge technology and a cleaner planet.
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Empower New Voices
The company has a deep bench of brilliant engineers, designers, and visionaries. It’s time to put them in the spotlight instead of letting every public conversation revolve around one person’s opinions.
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Reconnect with Early Supporters
The customers who once lined up for Teslas need a reason to stay. Whether through loyalty programs, sustainability initiatives, or innovative new products, Tesla must rekindle the passion that made it a revolutionary brand.
The Takeaway for Your Business
Tesla’s struggles highlight a key branding truth: A company must be bigger than its founder. If personal actions overshadow the mission, the brand suffers. The companies that endure are those that act early, refocus on their core identity, and put customers first, making their brand All About Them.
Food for thought: If your brand is built around your reputation, what happens when that reputation takes a hit?
I speak at conferences worldwide about branding, leadership, and messaging strategy. If your organization is looking for a keynote that will inspire and challenge your audience, I still have a few dates open in 2025. Let’s talk!
On the last day of 2020, I made the worst purchasing mistake of my life. I bought a Gray Tesla Y. After three Priuses (which I loved) I was tired of driving the most common car in my neighborhood, a car that had frequently caused Uber passengers to think I was their driver. Almost everybody seemed to have the S or the 3 in black or white. I thought a Gray Y would stand out a bit. And because Tesla’s only offered year leases, I decided to purchase my car rather than lease it, and since interests were so low I decided to finance it at about 2%. assuming they would retain their value as well as the Prius had. Within a year, there were so many cars on the road (in LA that looked exactly like mine) and they had lowered the price so pretty much for the entire time I’ve owned the car I have been paying more than a lease would have cost and have had zero equity. Even now, over four years later, my car is worth barely what i still owe on it. Maybe less now that the brand has become toxic. And contempt for Musk recently cost me $400 as somebody punctured an almost-new tire. Most of all, I feel like I want to apologize to everybody I see for driving the car. The fact is, it drives great. It’s a wonderful car. But I’ve hated it for nearly the entire time I’ve owned it.
Bruce, your column is brilliant: absolutely on point, with no wasted words. Although I never owned a Tesla, I decided long ago–back in 2015, I think–that Elon Musk was the Thomas Edison of our time, a once-a-century genius. So I bought Tesla stock, 10 or 20 shares at a time, over the next five years. At every point, Schwab rated it D or F. I ignored them. Elon was my guy! Tesla was my brand, or at least the stock was. In 2020 I began to sell. I sold some shares for 20-30x what I’d paid. I kept some, though. I watched the whole Twitter/X thing happen. I didn’t know what to think of Elon at that point in his new incarnation as Mr. Free Speech, but I became aware that he was determined not just to own Twitter, but to be the biggest voice on the platform. And then the 2024 election happened, and Inauguration Day came and went, and suddenly Elon was everywhere, slinging a chainsaw. He may still be a genius, but I’m TIRED of the guy. I’ve sold most of the remaining Tesla shares I had at 5x what I paid, but all of the romance has disappeared, all of the hunger to ignore Schwab’s “avoid!” ratings and hook my future onto the promise he represented. When the dust settles, I think the smart brand managers will look at what he’s done to the Tesla brand, AS a brand, and view it as one of the most spectacular, self-inflicted brand wounds in American corporate history. BUT: you have offered what feels to me like an inspired, point-by-point comeback strategy. I’m not at all sure that Elon cares about his brand anymore. He has come untethered and floated free from all reasonable restraint. He remains a one-of-a-kind dude. If he has any sense at all, he will take your advice.
Interesting comments on Tesla.. I was on a zoom call this past week with Dr, Ben Hardy and he posited that Musks goal is to be the first to get to Mars.. and he is willing to destroy Tesla if he needs to… he is where he needs to be to get gov’t support on helping to pay for a rocket. Interesting read on the subject.
Bruce, I hope Musk doesn’t read this!
Timely post, Bruce. Always appreciate your insights.
On Tesla: I’m skeptical the brand can recover. Its core audience of progressive thinkers and environmentally conscious consumers, has largely walked away. And the crowd he now salutes doesn’t appear interested in replacing them.
Tesla isn’t just losing customers; it’s losing its identity.
Your point about leadership’s responsibility to its brand is spot on.
Re your question: If your brand is built around your reputation, what happens when that reputation takes a hit? Here’s my thought:
If a brand is built only on reputation, it’s just a business dependent on reputation. It’s not a brand. So if that reputation crashes, so does the business. There’s no real brand to worry about – just a name that no longer holds value (despite what personal branding gurus tell us).
But if a company is built on more than just reputation – the ingredients that led to brand status such as a promise, a shared belief, and a purpose people care about, a strong value prop – a reputation hit will still hurt, but it won’t be fatal. A company built on real meaning – the elements that define an actual brand – has the cushioning to recover.
Tesla once had that cushion. But every day it fails to address its issues, fails to communicate with its audience, and fails to manage Musk (as Uber did with Kalanick), the emotional connection that once made Tesla a brand erodes further.
At this rate, we’re watching the real-time collapse of a brand that once stood for something but now stands for nothing. Especially when you consider that Tesla, a brand built on the premise of a fragile planet, is now championed by someone who openly disregards that ideal given the company he keeps.
Tesla is irreparable. It will fade into Uber land and live out its life as a glorified taxi and will be quickly replaced by better brands and better cars—like BMW, Volvo, Kia, Rivian, and my favorite – Jaguar, which now boasts not only a superior vehicle but a stunning new logo to match!.
Sending you warm regards Bruce.
You may very well be right, Marc. It certainly might be too late. But if I were an investor or otherwise vested in the brand and its business, I would certainly want to see what could be done to rescue both the brand and its brand value. But every day that the problem is ignored or disregarded is just one more day that the brand gets closer and closer to irrelevance.
Bruce, so on target and complete with smart strategic insights.
Thank you
Thank you Alan.
This won’t be nearly as effective as a Harris/Walz bumper sticker but … Tesla gains key protections from the Justice Department. Attorney General Pam Bondi yesterday called a recent string of vandalism incidents at Tesla dealerships “domestic terrorism” that would be prosecuted with “severe consequences” for the perpetrators, a further sign of Elon Musk’s influence in the Trump administration. Separately, the electric vehicle maker won approval from California regulators to operate its self-driving taxi service on the state’s roadways. That hasn’t helped the company’s share price, which has more than halved since December as short-sellers circle.
It seems that any added politicization (such as Bondi’s proclamation) will only weaken the brand further, Rick. After all, almost no one walking into a car dealership wants to be involved in that kind of craziness, regardless of how they choose to vote in the privacy of the voting booth.