Which side will Musk toast fall on? It’s a fascinating moment in American economic and political history: how will the crazy saga of the richest man in the world end? Just two weeks ago, the media pounced on the beast, attracted by the smell of blood: Elon Musk was on the verge of implosion, his capricious billionaire antics were going to end in a romp. Tesla shares in free fall, takeover of Twitter looking like a shipwreck, disgruntled shareholders, lawsuits, allegations of sexual harassment… The king was naked.
Or not. Within days, Tesla stock rallied 19% from its May 24 low. Twitter’s acquisition is gaining credibility again, after Musk indicated he no longer plans to use a Tesla stock-backed margin loan to fund the deal. And Musk, more showy than ever, continues to taunt everyone, starting with Joe Biden. As a man on the ground, we have seen better!
What happened? And above all, what will happen? Impossible to say, so unpredictable is the man. And how to coldly analyze the acts of a man elevated to the rank of myth? Elon Musk isn’t just a CEO, he’s a magnet, a living god for millions of fans, a serial tweeter whose most mundane message (“Politics is a generator of sadness”) attracts 531,400 “likes “, 63,500 retweets and 26,300 replies. However, we must ask ourselves: Elon Musk is not only a unique, extraordinary CEO, he is a Rorschach test of America today.
Two possible scenarios
Two scenarios are possible. In the first, the infernal saga of the founder of Tesla and SpaceX ends in a crash. A road exit. An implosion. At SpaceX, no big cloud on the horizon, apart from the publication of information according to which the company paid $ 250,000 to a flight attendant in 2018, in order to settle a complaint for insistent request from the CEO. to receive a massage… supported (“totally false” accusations, Musk replied on Twitter). At Tesla, on the other hand, the worries are piling up. Production logistics problems and slowdown in demand in China, series accidents of cars using the Full Self-Driving assistance system (the last crash, on May 12 in Newport Beach, California, killed the three occupants of the car and injured several construction workers), the proliferation of competitors’ electric car models, such as Ford’s F-150 pickup truck, growls increasingly loudly from Tesla shareholders over the major “distraction” of the attempt to Takeover of Twitter…
Twitter, precisely, is another source of problems for Elon Musk. The stock price fell like a puff as no one believed in a buyout at the price agreed by Musk and Twitter’s board. The acquisition is “on hold”, announced the billionaire, who intends to renegotiate the deal at a lower price. Twitter employee morale is at an all-time low, the Securities and Exchange Commission (SEC) looks into possible violations over Musk’s stock purchases, a class action lawsuit by Twitter shareholders is in tips in California, and press articles abound on Musk’s naïve, or simply amorphous, conceptions of “freedom of expression”.
Each of these problems, taken in isolation, is not insoluble. But Elon Musk doesn’t just face a series of difficulties – he creates them. Furious at being snubbed by a Democratic president who favors builders open to unions, he suddenly turned his cuti from a politically unclassifiable libertarian to that of a Republican. A May 18 tweet set the tone, in which Musk called the Democratic Party “a party of division and hate” and announced that he would now vote Republican. He also announced that in the event of a takeover of Twitter, he would end the banishment of Donald Trump on the social network. At the same time, he multiplies the provocations against the administration, continuing for example to taunt the SEC or the Federal Trade Commission, another government agency.
Enough is enough. On the side of the public authorities, the incessant provocations of Elon Musk could well earn him some worries. As noted by Sebastian Mallaby, of washington post“the United States remains the most powerful economy in the world precisely because it finds the balance between glorifying and restraining its titans (…). When the behavior [de Musk] becomes too erratic, institutional and legal forces combine to pin him down.” Yet it was these same public authorities that had allowed Tesla to take off, in particular thanks to a low-interest loan of 465 million dollars granted by the the Obama administration’s Energy Department in 2010, or even the California State’s “zero emissions” automobile program, which allowed Tesla to sell several billion dollars of gas “emissions credits” to greenhouse effect on other manufacturers. Without this massive aid, Tesla probably would not have survived, and in an industry as regulated as the automobile, Musk may find that his lack of gratitude today has a cost. .
The second danger, perhaps even more real, is to see Tesla’s image deteriorate to the point of destroying the “Musk legend” which justifies Tesla’s incredible stock market valuation. The risk is evident in California, by far the most important market for Tesla in the United States, and a Democratic state that Musk now criticizes all the time. The CEO says he is not afraid that Californian drivers will take a dislike to him: “I am confident that we will be able to sell all the cars we can produce,” he boasted recently. “Right now the delivery time for an ordered Tesla is ridiculously long, so our problem is not demand but production.”
Reality? The rapid rise of electrification among Tesla’s competitors threatens to make the electric pioneer a carmaker like any other. Sign of the times: Musk’s incessant broken promises about future innovations, such as autonomous driving “in two years”, now regularly come to the fore. These threats would warrant redoubled attention from the CEO, in contrast to his antics on Twitter and elsewhere. As entrusted to Times Daniel Ives, one of Tesla’s most prominent financial analysts, “it feels like the pilot of the plane is watching a show on Netflix while we’re going through a massive thunderstorm.”
“He’s a crook”
Impression reinforced by the attempted takeover of Twitter. After weeks of about-faces, criticisms or insults against the management of Twitter and various and varied provocations, Elon Musk “after the fact transformed into a hostile takeover what was largely, at the start, a friendly deal “, notes Lauren Hirsch, specialist in mergers and acquisitions at New York Times. “His actions have left Twitter, regulators, bankers and lawyers puzzled as to what his next move will be, and the possibility of closing the mega-deal.” Others are even more critical, not only of the Twitter operation but of Musk’s personality in general. “He’s a crook,” accused Jackson Palmer, co-founder of the Dogecoin cryptocurrency, in an interview with an Australian site. “He sells a vision hoping that he can one day deliver on his promises, but with no idea of their chances of coming to fruition. He’s just very good at making people believe he knows. This is especially evident with the promise of Tesla of driverless cars.”
Add to this long list of problems and criticisms a series of diverse and varied legal complaints, or even an unease among Tesla executives that has led to many departures: the accumulation of all these dark clouds on the horizon could well turn into a fatal storm or, to take a completely different image, into the combustion of an Elon-Icarus who would have ended up taking himself for the solar star.
But there is another scenario, not so unlikely: Musk’s triumph. Imagine. The takeover of Twitter ends up being done at a lower price, thanks to the support of shareholders like Twitter founder Jack Dorsey, and the fact that the future of the company, in the absence of the buyer Musk, looks very bleak . Tesla, which continues to innovate in many areas, consolidates its domination and becomes an automotive giant, offering models accessible to ordinary drivers. SpaceX continues to dominate the space industry. And Musk continues to taunt government agencies, not even scratched by fines the amounts of which — a few hundred thousand dollars — make him howl with laughter. Still just as rich but now protected by the control of Twitter and the incredible power it gives him, he becomes politically untouchable.
This scenario would not only sign the victory of Elon Musk. It would symbolize the triumph of billionaires, richer and more powerful than America has ever counted.