In hindsight, the farts were a giveaway. A few years ago, I was getting a lift in a Tesla Model Y, when the driver (a friend of a friend) offered to show me some of the car’s innovative features. Tesla is known for revolutionising the auto industry, turning the electric vehicle into a mass-market product, so my expectations were high. Then my acquaintance pressed something on the gigantic touch screen, and a cartoonish farting noise erupted from a speaker near my seat. He jabbed at the screen again, and now the flatulence came from the passengers behind us. I remember wondering, as we all sat there smiling sheepishly, whether this was what Tesla’s elevated stock market value rested on.
In its small way, the whoopee-cushion function illustrates a weakness of Tesla’s CEO, the serial entrepreneur-turned-political actor Elon Musk. It is not enough, apparently, for Musk to be idolised for his achievements in business and technology. He also insists on engaging in the kind of attention-seeking behaviour you might expect from a troubled 13-year-old boy, albeit one who commands unfathomable wealth and influence. The potential downsides for Tesla have long been apparent. The same man who exhibited those fart sounds to me — a progressive-minded software contractor at a major European company — also said that he was thinking about trading in his Model Y in protest at Musk’s political activism, which was then just getting started.
Today, Tesla’s future hinges on a bewildering combination of factors. In addition to Musk’s overbearing persona, given free range on his social media platform, X, he has entangled himself with the radical Trump regime, and with insurgent Right-wing parties in Europe. As if this was not jeopardy enough, the entrepreneur is also betting that he can use Tesla to launch a new wave of paradigm-shifting technological breakthroughs. Or so he claims. In this strange mix of audacity, hubris and mere trolling, it is becoming difficult to tell where the strategy ends and the hot air begins.
For the time being, Tesla is in the firing line as misgivings about Musk pall into outrage. Sales are plunging around the world. In Germany, where Musk enthusiastically backed the Alternative für Deutschland in the recent election, they were down 76% year-on-year in February. In Australia they fell by 66%. A wave of protests and vandalism at Tesla dealerships, which has been building in the US for months, erupted in numerous other countries last week. Meanwhile, a fresh dip in the company’s stock price means that it has now lost more than half of its market value since December. Tesla owners are even trying to disguise their cars by rebadging them as other vehicles. A JP Morgan analyst said of the backlash: “we struggle to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly.”
Thanks to his showboating, Musk has made himself a focal point for resistance to the Trump regime. The surreal spectacle of Just Stop Oil protestors vandalising a Tesla showroom in London, thereby attacking a company which has done more than any other to kill the petrol car, suggests the strange territory that the brand is entering. Its image is shifting from green icon to MAGA accessory. In a bid to stop last week’s rout, Trump was persuaded to pose with some Teslas and to commit to buying one. But there are few signs, as yet, that Musk’s closeness with the President is delivering significant spoils for his car company, even if Tesla will suffer less than its competitors from the withdrawal of EV subsidies. A rumoured contract to supply armoured vehicles for the diplomatic service will not outweigh the brand damage of associating with a regime intent on dismantling climate policies. When Musk was known as a brilliant if somewhat eccentric entrepreneur, he could rely on a wide base of progressives, tech fans and admiring business types to buy his cars. By contrast, his new followers on the libertarian Right are more likely to cherish their diesel trucks as symbols of liberty threatened by a despotic green state.
This all looks like a baffling campaign of self-sabotage, until we step back and reckon with the full scope of Musk’s ambitions. The man is mission-driven to an unusual, almost frightening degree. He uses capitalism as a framework for trying to realise big, concrete visions for the world, and is willing to take risks and suffer setbacks on the way. The simplest explanation for his decision to partner with Trump and ransack the Federal government via his Department of Government Efficiency is that he saw the American state bureaucracy as an obstacle to his goals, namely exploring space, developing artificial intelligence and “deleting the woke mind virus”. As for Tesla, Musk appears to be wagering that a dramatic expansion of the company’s mission will render irrelevant the hostility to his personal actions.
The first bet is autonomous vehicles, in the form of Tesla’s Cybercab, a product that some excitable analysts think could replace not just combustion cars, but car ownership as we know it. Musk has suggested that these vehicles — the prototypes resemble the streamlined noses of high-speed trains — would allow Teslas to operate as self-driving taxis when their owners aren’t using them, independently roaming cities and providing lifts for paying customers. The implication is that we will soon be treating cars as a service rather than something we own. At the same time, Tesla is developing a humanoid robot, for which Musk has made even grander claims. It will, he says, be “the biggest product ever of any kind”. Called the Optimus, this AI-powered minion could “be a teacher, babysit your kids… walk your dog, mow your lawn, get the groceries, just be your friend, serve drinks. Whatever you can think of, it will do.”
Last year, a showcase of these futuristic machines raised more questions than it answered (it later emerged that the “autonomous” robots were being remotely operated). Notwithstanding Musk’s ever-optimistic timelines, they remain largely in the realm of science fiction. And yet, despite the beatings that Tesla has taken in recent months, there is still everything to play for. Its enormous stock market losses have merely erased a surge in value since Trump’s election in November. Tesla is still as valuable as the next five biggest car companies combined, suggesting a level of expectation totally out of proportion with what its current business model can achieve. Market analysts say that Tesla’s value now owes much more to bets on self-driving technology, robotaxis and robots than to car sales.
So why do these investors remain so confident? The obvious answer is that, while Musk rarely delivers his promises in full and on time, he nonetheless has an impressive track record of high-stakes innovation. At Harvard Business Review, Andy Wu and Goran Calic observe that the billionaire tends to focus on problems that “involve navigating scale and overcoming complexity”. He chooses very big and difficult challenges that few rivals have the stamina or risk tolerance to tackle. When he succeeds, he captures a significant advantage in the relevant industry. Take SpaceX, for instance: designing cheap rockets is difficult, and designing reusable ones more so. But by 2023, the company was responsible for almost 80% of US space launches, and nearly half of all launches worldwide.
Tesla’s own history shows the same principles in action. Its original mission, as Musk wrote in 2013, was “to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible”. The company had been founded a decade earlier, though Musk did not join until 2004. It began by trying to design an attractive electric sports car, which required bold thinking as well as a good deal of improvisation and borrowing. When its first model, the Roadster, arrived in 2008, it used a Lotus chassis and ran on laptop batteries. Tesla’s subsequent partner, Panasonic, made battery cells with techniques adapted from VHS cassettes. Until recently, the cars have also looked pretty conventional; an element of familiarity has always been important for encouraging people to adopt new technologies.
As it rose to success in the 2010s, Tesla became the first major carmaker to function like a Silicon Valley tech company. Its vehicles have sophisticated software systems, updated remotely like an iPhone, and since 2015 they have been partially controlled by an Autopilot capability. What really made the difference, though, was that Tesla found a way to manufacture EVs on a massive scale. Like Apple, or indeed Henry Ford, the company focused on making just a small range of products in large numbers. And rather than outsourcing to external suppliers, it developed its own infrastructure and supply chains, from enormous battery plants to networks of charging stations. Such tight control over production allowed Tesla to drive down costs and achieve economies of scale. With its S and X models, Tesla effectively created the mass market EV as a viable commercial category.
Tesla is, of course, much larger than Musk. But we shouldn’t fall for the now-fashionable conceit that the CEO is some sort of simpleton who just got lucky; his bloody-minded, autocratic management style has delivered results. Across his various companies, he has personally interviewed thousands of employees. Under his very public leadership, Tesla’s image was initially so potent that it did not advertise at all until 2023. If the brand manages to maintain an aura of possibility, it will be, in considerable part, because people think it unwise to bet against someone like this.
The problem is that the EV industry has caught up. Between them, the world’s big car marques now offer a bevy of electric and hybrid vehicles, making Tesla’s handful of models look increasingly stale. Meanwhile, China’s BYD has overtaken it as the world’s biggest EV maker by volume. Having grown with shocking speed, BYD is dominating the crucial Chinese market, and has just announced a new battery that allegedly charges in five minutes. Tesla needs a careful redesign, but this is one task that Musk seems unsuited to. The recent Cybertruck, with its sharp angles, metallic finish and domineering presence, has an anti-social character that recalls the most unattractive qualities of its chief architect.
And so, the company has reached a perilous juncture. Its remaining customers and investors face an increasingly urgent question: can Musk’s volatile public persona and political recklessness be judged separately from Tesla’s future trajectory, or do they reveal a CEO who is losing the plot? The longer Tesla promises fresh marvels without delivering them, the more people will be inclined to believe there is a madman at the helm.
Whatever the outcome, though, it is already too late to repair the wider rifts that Tesla’s recent troubles have exposed. Not too long ago, the tech world which sprang from Silicon Valley was held together by an ethos of corporate capitalism suffused with cultural liberalism. If this world was shaken by the radicalisation of Left-wing identity politics in recent years, it has now been decisively ruptured by some of its most prominent entrepreneurs and moguls shifting into the MAGA orbit. The Tesla brand used to appeal, above all, to people like that man who entertained me in his Model Y: successful, sensible progressives who wanted to believe that capitalism and technology would ensure everything works out for the best. Such complacent optimism now belongs to a simpler age. Clearly, innovation does not have a liberal bias after all.
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Source: UnHerd Read the original article here: https://unherd.com/
