Are we finally seeing the fall of Elon Musk?

I could write about Donald Trump’s tariff war, but you’ll get plenty of that elsewhere in the FT. So, since our San Francisco tech columnist Richard Waters is my correspondent today, I’ll stick with a topic in that arena, namely the future prospects of Elon Musk.

I would have loved to be in the room when Musk — who spent more than $25mn trying, unsuccessfully, to buy himself a state supreme court judge in Wisconsin last week — told folks in Green Bay that “the entire destiny of humanity” was at stake in the race. Midwesterners (I’m one) are humble people, and they tend to be sceptical of blowhards, especially when they ham it up in cheese hats. Conservative Judge Brad Schimel’s opponent, Susan Crawford, won the race by presenting herself as just what she was — an average person from Chippewa Falls taking on the world’s richest man.

The Democratic success in the race, despite Musk’s money dump, has put a bit more spring in progressives’ steps, particularly given the disaster of Trump’s tariff actions. I was in DC last week, and met with a high-ranking Democratic senator who told me that the party now believes that Musk and his demise (Trump is reportedly starting to sideline him) may hold the key to the party’s comeback.

For starters, Doge’s cuts to the federal government are starting to piss off Republicans as well as Democrats. Both of Alaska’s Republican senators are pushing to rescind cuts that they believe will hurt their state.

Others are saying they’ve been totally out of the loop as Musk hacks away at crucial government plumbing, including sacred cows like Social Security. As the senator I met with told me, “Something has started to turn in the last couple of weeks. People are saying: ‘Wait a minute, we don’t want to lose these programmes. We want our pension; we need our healthcare’.”

While very few Republicans have openly broken with Trump in terms of voting (which is really what is needed to allow Congress to take any action against the administration) tariffs, and the disastrous market reaction to them, may start to shift things.

Mitch McConnell can see the handwriting on the wall; he came out against tariffs last week. Voters are terrified about the loss of their retirement savings, and business leaders are freaking out about inflation. Technology stocks are among the hardest hit, and Tesla stock has lost nearly half of its value since the post-election high in December. Even before last week’s tariff announcement, a record fall in sales (down 13 per cent in the first three months of the year) had investors running for the exits.

Labour-aligned Democrats have used Tesla as part of a strategy to undermine Musk personally, but also to highlight the way in which oligarchs are at the centre of Trump’s administration. As I wrote a few weeks back, the American Federation of Teachers called on money managers to look more closely at the company’s financials, after which the stock price fell further than it already had. I know some union advisers who would love to see Musk hit with a margin call that pushed him into bankruptcy.

So, Richard, my question for you is: what does all this turmoil mean for Musk, the businessman? Will it matter if Trump kicks him out of Doge? Is Tesla on its last leg? Or will the fact that many Democrats as well as Republicans still support Musk’s efforts to put crypto at the centre of the financial system somehow redeem him? If Elon were a stock, would you sell, hold, or buy at discount?

Recommended reading

• Keep your eyes peeled for all the FT’s terrific tariff, trade and market coverage, from our reporters’ take on how Trump’s strategy could put a spanner in the works of the “China plus one” manufacturing strategy used by many Asian nations, to Mohamed El-Erian’s take on the best and worst scenarios from the disruption to the global economy.

• I can’t wait to read Leor Zmigrod’s book The Ideological Brain, which examines the neurobiology of our political opinions.

• And I wave a sad farewell to Pamela Paul, who was one of my favourite New York Times columnists. Her last op-ed is here. I think the fact that the Times got rid of one of the most balanced and least predictable opinion writers is a bad thing. So many times, you know what opinion columnists will say before they do. With her, you never did, and I always appreciated it. 

Richard Waters responds

It’s getting messy, but Doge’s “shock and awe” period looked like it would come to an end one way or another. Musk always faced diminishing returns from his full-frontal attack on the federal government, as he ran out of easy things to cut and resistance (both political and legal) grew.

And all the while, he was making powerful enemies. Even without the queasiness he’s induced in congressional Republicans, he was antagonising cabinet members with spending cuts that directly challenged their power bases. The knives were bound to come out, and the Wisconsin debacle has provided the perfect excuse.

It’s hard to see a smooth transition out of government service. His enemies will crow. But I think it would be a real mistake to underestimate the significance of the Doge effort, or whatever savings it manages to make. Democrats would be smart to take up the cause of serious government reform themselves. I’m not holding my breath.

I continue to believe that this won’t end in a personal split between Musk and Trump. Each has too much at stake. Trump needs Musk’s money (though, yes, he could do without the Cheesehead antics). Musk won’t want to lose his influence in the Oval Office and the valuable political capital he has amassed for his businesses.

What lasting effects this will have on Musk the businessman are harder to predict. Tesla investors have been desperate to get his attention back and would welcome an abrupt reset in his priorities.

But the biggest question is Musk himself. His attention was already wandering as his businesses multiplied, and he’s always been more interested in the next big challenge than the last one. How easy will it be for him to redirect his energy back to Tesla? Despite its post-election stock surge, the company was already facing a real midlife crisis. The damage to its brand from Musk’s Washington adventure won’t help.

Elsewhere, his business empire is in fine shape. SpaceX and Starlink both have competitors on the horizon, but their huge lead in space will take years for others to match. And Musk’s ability to mobilise capital and talent in Silicon Valley remains unmatched. Add in his almost bottomless appetite for risk, and there’s still nobody quite like him.

Remember that little more than two years ago, when the acquisition of Twitter was taking all his attention, it looked like he’d completely missed the boat on AI. Since then he’s started an AI company from scratch and, on some measures, matched the best in the industry (and last week, his AI company absorbed X, the former Twitter).

It’s too early to tell if this will be the next big expansion to his business empire. But I suspect we haven’t seen peak Musk quite yet.

Your feedback

And now a word from our Swampians . . .

In response to “Is Trump going into nosedive?”:
“It might be worth asking how they will find and train the thousands of extra customs officers needed to implement this stuff.” — David Lehmann