Why America may have passed peak Musk

When the two astronauts who’ve been stranded in orbit for the past nine months splashed down on Tuesday, a voice from mission control said: “On behalf of SpaceX, welcome home.”

So what? Say what you like (or don’t like) about Elon Musk, he has an almost intravenous connection to the American psyche as the man who picked up where Nasa left off and dared to dream again of new frontiers in space.

He has similar connections

• to the US economy through six companies employing about 110,000 people with a combined value of more than $800 billion; and
• to the US government through the Department of Government Efficiency (Doge), which he heads, and through his personal relationship with Donald Trump.

Not bad for a first-generation immigrant. It’s likely that no private citizen has had this much power and influence in the history of the American republic. The question is whether he’s in the process of throwing it all away.

Cars. A menacing backlash against Musk’s Tesla brand is under way in the US, where in recent weeks

• nearly 20 dealerships and charging stations have been set on fire;
• swastikas and the word “Nazi” have been painted onto showrooms and cars; and
• a convoy of Tesla Cybertrucks has been pelted with projectiles during Mardi Gras celebrations in New Orleans.

In a sunnier set of images Trump talked up Tesla on the White House lawn, but that was an exception to the new rule that Tesla executives watch the news from behind the sofa.

Cash. Of most concern to Musk will be the company’s sliding share price, down by nearly half from its post-election peak at a cost of about $730 billion in market value. Despite this, Tesla looks like a bubble. Its price-to-earnings ratio is eight times Toyota’s and more than three times Nvidia’s even though Nvidia’s earnings growth forecast for this year is nearly four times Tesla’s. All of which leads to a…

Crash scenario based on reports that more than half Musk’s Tesla shares are being used as collateral for loans to his other companies. In this scenario if Tesla’s stock price heads on down (as JP Morgan expects it to, to half its current value by the end of this year), insolvency looms for the company and its founder.

Is that likely? No.

• The Tesla Model Y is still by some rankings the world’s best-selling car.
• X, the platform formerly known as Twitter, is valued at $44 billion as of this week on the basis of secondary share sales, up from $10 billion last September.
• xAI, Musk’s AI company, is valued at $42 billion.
• Plenty of investors still buy into his vision of Tesla as a tech company rather than a car company, and plenty more will continue to back him as long as he stays close to Trump.

Can he relax then? Also no. That closeness is a large part of the reason for slumping Tesla sales, especially in China (down 49 per cent year-on-year last month as EV sales overall grew by 85 per cent) and Germany (down 76 per cent year-on-year last month after Musk lectured German voters on the merits of voting for the hard-right AfD).

Other reasons he can’t relax include

• Trump’s tariffs, which an unsigned Tesla note warns “will inevitably lead to… higher prices, fewer models and shut-down US production lines”;
• competition from China, where BYD has just introduced a five-minute fast-charger; and
• the Trump-Musk relationship itself. Trump sided with his cabinet at a tense White House meeting last week, asking for efficiencies to be found with the scalpel, not the hatchet.

Hatchet job. For now, Doge’s shock troops are embedded like land mines in most federal government departments, spreading dismay and anger as they threaten and enact sweeping job cuts. These people include

• Joe Gebbia, the billionaire co-founder of Airbnb and a Tesla board member;
• Alexandra Beynon, who according to her LinkedIn page was recently head of engineering for a firm providing “guided at-home ketamine therapy”; and
• James Burnham, described as a key player in the selection of three conservative Supreme Court justices in Trump’s first term.

Fifteen Doge staffers are in the Executive Office of the President, 14 are in the Office of Personnel Management and four are at the US Treasury.

What’s more… Four more are at the Federal Aviation Administration, which is reeling from a series of air crashes and where Doge staff are accused of trying to fire air traffic controllers.

Photo credit: Keegan Barber/NASA via AP