Elon Musk’s recent announcement of distancing himself from politics initially sparked investor optimism for increased focus on his technology companies. However, his very public dispute with former US President Donald Trump, and the subsequent airing of grievances, suggests a less straightforward scenario.
Instead of a retreat from the spotlight to bolster Tesla and other ventures, Musk now faces the threat of a boycott from a major client—the Trump administration. This resulted in a significant 14% drop in Tesla shares on Thursday, although a slight rebound followed on Friday amidst signs of de-escalation.
This situation is far from ideal for investors and analysts who’ve long advocated for Musk to prioritize his businesses over social media engagements. Some experts, however, believe Tesla’s challenges extend beyond this specific conflict.
Veteran tech journalist Kara Swisher, for instance, offered a stark assessment to the BBC at the San Francisco Media Summit: “Tesla’s finished,” she stated, acknowledging the company’s past successes but highlighting its lagging position in autonomous vehicle technology compared to competitors like Waymo.
Tesla is scheduled to launch autonomous robo-taxis in Austin, Texas, this month, a development that Wedbush Securities analyst Dan Ives described as a “watershed moment.” However, Musk’s divided attention casts doubt on the project’s prospects.
Furthermore, concerns are mounting regarding Musk’s motivation. Silicon Valley discussions increasingly center on whether he even retains the drive to turn things around. Ross Gerber, President and CEO of Gerber Kawasaki Wealth and Investment Management, a long-time Tesla investor, noted Musk’s past intensity but expressed concern over his current priorities, characterizing Thursday’s market downturn as “extremely painful.”
The BBC’s attempts to obtain comment from X, Tesla, and SpaceX were unsuccessful. Musk’s current predicament is further complicated by pre-existing opposition to Tesla, manifested in the #TeslaTakedown grassroots campaign. This, coupled with a reported 20% drop in car sales during the first quarter of the year and a significant profit decline, paints a challenging picture.
Protesters like Linda Koistinen have voiced concerns about Musk’s influence and lack of transparency, while disinformation researcher Joan Donovan highlights the weaponization of Tesla’s stock. Concerns also extend to X (formerly Twitter), with critics citing Musk’s acquisition as a means to amplify his reach and influence.
However, there’s a possibility that Musk’s break with Trump could lead to a rehabilitation of his public image among those who opposed his previous closeness to the former president. Patrick Moorhead of Moor Insights & Strategy suggests that the American public is forgiving, citing examples of similar corporate image recoveries. Kara Swisher drew parallels to Bill Gates’s past image challenges and subsequent rehabilitation.
Nonetheless, Musk’s future remains intertwined with Trump’s actions. Noah Smith suggests that Trump’s ventures into cryptocurrencies have reduced his reliance on Musk. Trump’s threat to cut Musk’s substantial government contracts, estimated at $38 billion, poses a significant threat, particularly to SpaceX and Starlink. While the feasibility of such actions is debatable given SpaceX’s integral role in the US space program, the uncertainty underscores the complex interplay between the two figures.
Musk’s subsequent retraction of a threat to decommission the Dragon spacecraft highlights his reactive behavior. While the end of the Musk-Trump friendship is clear, their interdependence remains less certain, with Trump’s actions potentially continuing to significantly impact Musk’s business ventures. Sign up for our Tech Decoded newsletter to follow the world’s top tech stories and trends. Outside the UK? Sign up here.