It’s not going well for Elon Musk

Tony Burke 

Today
Left Foot Forward

The recent X interview Musk conducted with Trump, was a technical shambles with a delayed start. 

Elon Musk’s right-wing commentaries on X, his cosying up to an increasingly erratic and disturbed Donald Trump and some strategic mistakes are damaging his business interests in the EU and US.

The recent X interview Musk conducted with Trump, was a technical shambles with a delayed start. Musk claimed it had been hacked by Iran and he then allowed Trump to ramble erratically. Musk looked out of control, as he lurched from one controversy to the next, seemingly thinking all publicity is good publicity.

Indeed, his badly judged attack on Keir Starmer during the UK’s right-wing riots coupled with his long running dispute with the Swedish IF Metall union over union rights and collective bargaining at Tesla in Sweden, and now a potential legal battle with the United Autoworkers in the USA over comments made about sacking workers during the X interview, have all been well publicised.

But behind the scenes his Tesla business has big problems with sales falling (down 5% globally in quarter 2 year on year) as the line-up of Tesla models ages and new competition arrives. And Tesla was recently hit by Rossmann, one of Europe’s largest drugstore chains who suspended Tesla vehicle purchases “with immediate effect” citing Musk’s support of Trump:

“Elon Musk makes no secret of his support for Donald Trump. Trump has repeatedly described climate change as a hoax—this attitude is in stark contrast to Tesla’s mission to contribute to environmental protection through the production of electric cars” said Raoul Rossmann, Rossmann’s spokesman for the management.

Rossmann is the first major business to cite Musk’s stance as a reason to stop buying Teslas. Other European companies have dropped orders from Tesla for different reasons. Software giant SAP said it would stop offering Teslas as company cars for employees given Tesla’s numerous price alterations.

And in the US, the rental firm Hertz was left reeling from its bad bet on Tesla, resulting in it offloading tens of thousands of the company’s vehicles. European leasing companies have faced a similar predicament, forcing Tesla to offer unofficial discounts to try and calm things down.

With the European EV market far larger than in the US, Tesla sales have slumped, down to an aging line up, strong competition and fewer government subsidies on offer. That has hit Tesla, with sales down 13% for the first half of 2024 compared to the same period in 2023.

Tesla shares peaked at over $400 back in 2021. But over the last year its share price has averaged $212. Shares fell 10% from a recent peak after slower sales, soaring costs from employee lay-offs and ever-greater investments in its artificial intelligence infrastructure hit quarterly profits. And Musk may yet have to off-load more Tesla stock next year to pay for the dire financial situation at X (formerly Twitter).

Other strategic blunders have contributed to Tesla’s problems. Musk had to postpone the unveiling of Tesla’s first “robotaxis” — a fleet of self-driving taxis after claiming that he would turn all Tesla vehicles into a “giant autonomous fleet” which could take the company’s valuation as high as $5tn — about six times its current market value. And the firm has been too slow to refresh its range and get an affordable small car (nicknamed the ‘Model 2’) to market.

And having once mocked China’s BYD EV, the latter is providing stiff competition. Tesla has slashed prices in order to compete. Meanwhile the much hyped Cybertruck pickup EV is bombing, exacerbated by recalls; nearly all of the 12,000 Cybertrucks sold are included in the recall.

With Starmer playing it long and avoiding being dragged into a slanging match with Musk, eyes will be on the revised on-line safety bill. Meanwhile, should Kamala Harris beat Trump in the US presidential election the reaction from Harris will be worth watching. Musk is unlikely to be a regular caller to the White House.

And in the UK Starmer may have levers to pull on possible tariffs on EVs from China (many Model 3s and Ys) are made there.

Tony Burke is the Co-Chair Of The Campaign For Trade Union Freedom