By JENNIFER CLANCY
For Elon Musk, these last few weeks have gone something like this: “Elon Musk endorses Donald Trump”; Elon “[commits] $45 Million a month to a new pro-Trump super PAC”; Elon “denies reported $45 million a month pledge”; Elon blasts his transgender daughter while speaking about his “fight against ‘woke mind virus’”; and “Tesla shares plummet after company reports falling profits.”
More than ever, Elon Musk is everywhere. He’s dominated space exploration, positioned himself as a champion of humanity and climate science; attended speeches on Capitol Hill and is influencing political elections; and he’s had an outsized presence in industry, including automotive, social media, and robotics. If there is a cookie for his varied interests, he’s certain to have a hand in the jar.
If you catch Musk in the right mood, he can say things that are easy to get behind. Things like “‘We must protect free speech’” and “‘Climate change is real.’” And another: “‘It was foolish of me.’” It’s so important for us, as human beings, to be able to self-reflect and admit when we are wrong. That’s how we come together and move forward.
But he also says things that give one pause or ratchet up anxiety. For example: Following the criminal conviction of former president Donald Trump, Musk tweeted: “Indeed, great damage was done today to the public’s faith in the American legal system.” Read into that what you will. Or this one: “New Twitter policy is freedom of speech, but not freedom of reach.” What does this mean exactly? Will Twitter under Musk allow misinformation or hate speech to exist but suppress other content he might disagree with?
When it comes to X, Free Press (a 501c3 “created to give people a voice in the crucial decisions that shape our media”) reports that Musk has little more than traded one form of censorship for his own. In his Twitter Files investigation, Musk asserted “bombshell revelations proving [politically-biased] censorship” by the platform before he purchased it. Out with the old king; in with the new.
Under this dictum of freedom of speech but not reach, will Twitter — at Musk’s direction — be the private arbiter of who/what gets elevated and suppressed? Isn’t that exactly what he was accusing the previous Twitter operation of doing?
To date, he’s proven that he can control the narrative. He’s flexed his excessive financial influence and staked his claim politically. And now, he’s attempted to slide the possible future president, Donald Trump, into his pocket for safe keeping. As reported by Business Insider, Musk says: “‘I can be persuasive. I have had some conversations with him, and he does call me out of the blue for no reason. I don’t know why, but he does.’”
Recent NPR reporting called out the obvious: “[For Tesla], Musk’s embrace of a Republican candidate who opposes lucrative federal EV tax credits is feeding speculation about the company’s overall strategy, and whether it could be harmed by its CEO’s political sentiments.” The full extent of the harm to come remains to be seen. But the EV innovator’s flippant attitude toward the potential for painful consumer action against Tesla speaks volumes about his stability as a business leader.
Why is he compelled to pick sides so publicly and aggressively in such a politically charged environment? As a business owner myself, I have to wonder why he’d risk alienating stakeholders (investors, shareholders, existing and potential customers, partners). This question is not so much about Trump or Biden or Harris — but what’s the upside reward for taking such risks?
It’s not to say that since the creation of the first-ever corporation there has not been maneuvering to influence policy in the interest of corporate agendas. But to be so… Musk about it? Honestly, what is he thinking?
Flash back to 2021 when Tesla stock was at its peak, and when Musk was named ‘Person of the Year’ by Time magazine, proclaiming him “the man who aspires to save our planet.” This was before his great takeover of Twitter, which at the time of the purchase in 2022, Musk stated his purpose for the acquisition was to “try to help humanity”.
Business Insider explained Musk’s reasoning for his involvement in politics this way: “He weighs in on politics when it could affect his businesses.” And affecting his businesses it certainly is, but not in the way he might have intended at the time.
One thing is certain. Elon Musk is bad for business.
After the recent news that Tesla financials plunged to a five-year low, Reuters characterizes Musk as “hyp[ing] everything but cars”; however, it doesn’t address the real elephant in the room. Talking about products that don’t exist yet like robotaxis and humanoid robots while addressing shareholders expecting answers for slipping profits seems like a distraction. So how is all that Musk-hype impacting revenue?
Since the acquisition of Twitter and subsequent brand rollout to X, the company’s valuation has dropped 71%. A long and persistent combination of missteps has contributed to the decline, including a rise of hate speech, bot accounts, and even Musk himself telling “Fleeing Advertisers To “Go Fuck” Themselves” on CNBC.
In his quest to create a global “town square”, considerations for content moderation and hate speech have been deprioritized. Alarmingly, studies indicate that hate speech on the platform has increased significantly and that there is “no sign of hate speech returning to previously typical levels.” The Washington Post reported a 500% increased use of the ’N’ word just days after Musk acquired the platform.
When you overlay the valuation trends of Tesla and X against Musk’s increasingly inflammatory rhetoric, political positioning, and reframing of censorship parameters on the X platform, the correlation is clear.
Twitter was valued at $44 billion at the October 2022 purchase date. One year later, it had dropped to just $19 billion. And by the start of 2024, X had slid to just $12.5 billion. That’s an average loss of just under $2 billion per month since Musk installed himself as CEO at the company.
Looking at the same time period, Tesla’s decline is similarly precipitous. Tesla stock reached an all-time high in November 2021 at just north of $407 per share. Many questioned that valuation. But since, the trajectory has been a chaotic cluster of peaks and valleys racing down, falling to just $225 per share as of July 25, 2024.
As for how Musk’s rhetoric affected Tesla’s market during the same period?
According to reporting by Fortune, liberals comprised 40% of Tesla’s sales in 2022 and 2023, but that number fell to just 15% by the start of 2024.
Where customers were once drawn to the promise of spending their dollar with a company making strides to improve human impact on the environment by shifting from combustion engines to EVs, they are now purchasing that same promise from less politically polarizing competitors such as Hyundai, Cadillac, and Mercedes-Benz. China’s BYD is slicing into Tesla’s global sales as well.
It’s safe to say that Musk’s intensifying rhetoric that seems increasingly disconnected from his business interests has been a major turnoff for a significant portion of his native Tesla customer base.
Buying Twitter has been a communications disaster for Musk. Financial losses aside, owning a social media platform to exponentially amplify opinions and political positions could not be more dangerous for a man like Elon Musk. Just imagine if instead of weaponizing Twitter, he had taken a more measured, diplomatic, discrete approach to influencing policy? My guess is shareholders and customers would have been more forgiving.
Even if Musk ignored the risk assessment of drawing political battle lines at his brands’ expense, what did he think offering Trump an endorsement and multimillion dollar monthly donation, only to walk it back in the same week, was really going to buy him?
Only days into their newfound alignment, Trump and Musk both seem to be recoiling. Musk went on to deny creating a fund to support the Republican nominee, claiming not to “subscribe to cults of personality.” Tesla just hit pause on a production facility in Mexico, reportedly due to concerns of a potential Trump White House that would likely impose tariffs and “reduce support for the green transition.”
After widely touting Musk’s recent endorsement and alleged financial commitment to his reelection bid, Trump fired warning shots at a speaking engagement in Florida to round out the week. In detailed remarks, he suggested that EVs are unable to go the distance, that building charging station infrastructure at scale would drive America into bankruptcy, and ultimately, that Tesla cars are “not for everyone.”
As it stands, the short-lived Musk-Trump political romance was likely doomed from the start, with little oxygen in either camp to seriously fold in a new friend.
If there’s a lesson to be learned, bypassing thoughtful consideration before mixing politics and business can have a torpedo effect on the bottom line.