Elon Musk’s political entanglement with Donald Trump appears to have backfired significantly for his business ventures, particularly Tesla. Their messy split is raising concerns among investors, with Tesla shares seeing a major drop. Trump’s threats towards Musk’s various enterprises, especially SpaceX’s government contracts, could jeopardize those vital links. Analysts warn this fallout could alienate customers and threaten Musk’s ambitious projects reliant on government approval.
Elon Musk’s deep dive into politics is starting to take a toll on his famed business. His close ties with Donald Trump seemed like an odd decision from the get-go, but now his dramatic split with Trump could be even more damaging. As the owner of Tesla, that makes him a big player in the electric vehicle market – an expensive purchase that’s highly coveted by Americans.
Initially, Musk’s support for Trump alienated Tesla’s core base, primarily Democrats on the coasts. By funneling cash and leveraging his influence, he seemed determined to help Trump claim the presidency again. And then, before anyone could catch their breath, he chopped away at the federal workforce. The situation escalated when Trump acknowledged their falling out; Musk has been vocal lately against the president’s sprawling domestic agenda. Their rift, now public and messy, could scare off the Trump supporters who’d otherwise consider a Tesla.
Adding fuel to the fire, Musk’s ambitions for self-driving cars hinge on government approval, which now seems less guaranteed given the current turmoil. Not to mention, parts of his broader empire, like SpaceX, are built on fragile government contracts that Trump made a point to threaten just this week. It’s been a rocky 12 months for Musk – it seems he picked a risky route by forming such a polarizing alliance with Trump only to turn around and sever ties.
Dan Ives, a senior analyst at Wedbush Securities and long-time Tesla fan, commented on this bizarre shift, saying it’s perplexing how quickly Musk’s stance has changed towards Trump. He added it’s a potentially dangerous choice for a consumer-centric company like Tesla. The unfolding split, played out on social media, is a spectacle that is both inevitable and surprising in its sheer audacity.
Following Musk’s harsh criticism of Trump’s policy bill, calling it a “disgusting abomination,” things went downhill fast. Trump shot back, implying Musk was suffering from “Trump derangement syndrome” before Musk countered by diminishing Trump’s political achievements, declaring that without him, Trump would have lost the election. As both billionaires exchanged barbs, Tesla’s stock price spiraled down.
Indeed, Tesla shares took a significant hit – plummeting 14% in just one day, as Musk’s fallout with Trump unfolded in the public eye. This debacle wiped out about $152 billion from Tesla’s market value and cost Musk around $34 billion of his own wealth, according to the Bloomberg Billionaires Index.
Investors are worried, and understandably so. Firstly, Musk’s public spat with the president could push away potential customers who are Trump supporters. Ives highlights the risk of alienating both major political groups, which could spell disaster for a consumer-driven company.
Moreover, Tesla is heavily dependent on federal tax credits and approval for its self-driving tech, which investors had hoped would come shortly post-election. And not to forget, other ventures like Neuralink rely on FDA approvals too. The overarching implications are pretty daunting; the Trump administration will dictate regulations around self-driving vehicles. You want Trump to play nice, not be your enemy.
Bill George, a scholar at Harvard Business School, labelled this public feud a “brutal breakup,” warning that clashing with a sitting president can cause major collateral damage to your business.
Trump didn’t hold back on social media, warning to cut off Musk’s government subsidies and contracts, stating it could save “billions”. Musk’s SpaceX, after all, flourishes on federal contracts, especially with NASA and the recent FAA partnership for monitoring airspace.
Yale’s Jeffrey Sonnenfeld summed up the scenario, highlighting that this isn’t just about leadership styles or political stances. He says these guys are acting like rival mob bosses, and this fallout is going to get messy. George reinforces that, not long ago, Musk and Trump were chummy, but now, lessons abound. You can either work in government or run a business, but not both simultaneously; that much is clear.
Original Source: www.cnn.com
