Musk faces big challenges as he leaves Washington for the business world

Qatar Tribune

2 days ago

Agencies
Elon Musk is leaving Washington after a short but turbulent stint in government and getting back to his numerous businesses, each with their own set of issues for the billionaire to address.
Start with his electric car company Tesla. While how much Musk accomplished in his role as President Donald Trump's chief cost-cutter is up for debate, it's clear his association with right-wing politics damaged Tesla's brand and tanked sales.
Musk's social media platform X, formerly Twitter, needs to rebuild its advertising base; his aerospace company SpaceX appears to be financially promising but has seen some recent setbacks; and it's unclear if his satellite business Starlink can keep striking deals without Trump nearby.
Profits plunged 71% at Tesla in the first three months of the year right after a Chinese competitor claimed the mantle as the world's biggest electric car seller.The big question now: Will Musk's leaving Washington help lure buyers back? The answer is crucial to reviving profits because so much else is uncertain. Tesla's lineup of cars is aging and its foreign rivals have become much more competitive.
They would be taking market share from Tesla even in the best of circumstances.Tesla's decision to close down factories as it retooled its best-selling Model Y, among other temporary problems, contributed to its struggles in the first quarter.
But the blowback from Musk's time in Washington has some analysts and investors worried.In a note to clients, JP Morgan warned of 'unprecedented brand damage.' Wedbush Securities said at one point, 'This is a full blown crisis.'And a group of smaller investors just Wednesday wrote to Tesla's board demanding it require Musk to spend at least 40 hours a week repairing its 'plummeting global reputation' among other problems.
Musk has been talking about robotaxis for more than a decade, but next month they may finally hit the road. He has promised to test 10 or 20 robotaxis in Austin, Texas, then ramp that up to hundreds of thousands by the end of next year.
'Can you go to sleep in our cars and wake up at your destination?' the billionaire asked investors in a conference call last month, then answered, 'I'm confident that will be available in many cities in the U.S. by the end of this year.'
Investors are convinced Musk will deliver, judging by the 50% jump in Tesla stock since he made that statement. But he faces many challenges, not least is whether technically the taxis will work without hitting things — or people.
Federal safety regulators last month requested data from Telsa on how the robotaxis will perform in low-visibility conditions. That request comes after an investigation into 2.4 million Teslas last year equipped with Full Self-Driving software after several accidents, including one in which a pedestrian was killed.
Even if the Austin test goes off without a hitch, Musk faces another challenge: Waymo.
The driverless taxi company owed by Google parent Alphabet just logged its ten-millionth trip and is now operating in San Francisco, Los Angeles, and several other cities.
After Musk bought Twitter in 2022 and opened it up to all manner of conspiracy theories, long-time advertisers began to flee. Then Musk made the situation worse when he threatened to 'name and shame' them, and sued them.Now advertisers are inching back, though maybe not for a good reason.
'Some big brands resumed spending on X in part to curry favor with the Trump administration, or to avoid potential retaliation by Musk,' said e-marketer analyst Jasmine Enberg,. 'But fear is not a sustainable motivator, and most were spending less than they were previously.'
She expects X's ad business will rebound this year, but still be smaller than it was before Musk bought the company.It's not clear how well Musk's rocket company SpaceX is faring because the private company doesn't disclose its finances. That said, news headlines point to both troubles and triumphs.