- Elon Musk's Twitter circus has accelerated Tesla's decline in the EV market, Paul Krugman said.
- The top economist pointed to Musk's controversial tweets, which have alienated Tesla's affluent and liberal customers.
Nobel laureate Paul Krugman doubled-down on his criticisms of Elon Musk, saying his bizarre antics on Twitter and "lack of impulse control" will hasten Tesla's decline in the electric vehicle market.
His political tweets, such as when he mocked gender pronouns and encouraged his followers to vote Republican in the midterm elections, have tarnished Tesla's branding, Krugman said in a New York Times op-ed on Friday.
"[Tesla] is a brand whose customer base largely consists of wealthy cultural liberals who were attracted in part by Elon Musk's perceived with-it persona. Given all that, Musk's public embrace of MAGA conspiracy theories is an almost inconceivably bad marketing move, practically designed to alienate his main buyers," he wrote.
The economist has been a loud critic of Musk, previously calling the Tesla CEO an "insecure billionaire" and warning users of a "Muskpocalypse" after he acquired Twitter last year and launched an ambitious revamp of the social media platform that included slashing the company's workforce in half.
Tesla investors have urged Musk to step away from his Twitter sideshow and focus more on his EV company, which lost $700 billion in market value last year amid tough macro conditions and Musk cashing in his own Tesla shares, in part to fund his Twitter revamp.
Musk has promised to step down as Twitter's CEO after finding a suitable replacement. Analysts say that could be bullish for Tesla stock — but the company was already on the path for its inevitable demise as a market leader, Krugman said, due to the economics of the electric-vehicle space. EV companies have been hit hard amid the Fed's rate hikes, which have cut off the liquidity that allowed tech and other growth stocks to flourish over the past decade.
That suggests Tesla is unlikely to see long-term profits to justify its stock price and was probably headed for a fall eventually, "even if Musk had been who his fans imagined him to be," Krugman added.
"But Musk might have been able to postpone the day of reckoning, at least for a while, if he had managed to hide who he was from his best customers a little longer."