Musk’s act of contrition isn’t enough for Tesla

By Liam Denning

Sometime in the wee hours of Wednesday, Elon Musk shared a pang of contrition:

I regret some of my posts about President @realDonaldTrump last week. They went too far.

Telling the president that he owes his election to you, amplifying calls for his impeachment and throwing in alleged associations with a dead sex offender do indeed err toward the pugnacious. Even so, Musk, like Trump, is not one to back down easily. Besides reported interventions from the likes of Vice President J D Vance, the slump in Tesla Inc.’s shares during last Thursday’s online onslaught presents an obvious rationale. Investors appear relieved that the boss is showing his seldom seen humbler side, with the stock having made back virtually all of that loss. Meanwhile, a frisson had arrived on Tuesday in the form of a brief clip on X, Musk’s social media platform, apparently showing a self-driving Model Y turning a corner in Austin.

This most Panglossian read of the past week ignores a couple of things.

Regarding the spat with President Donald Trump, the salient point is not that Musk now appears open to reconciling. It is that the chief executive of a $1 trillion-ish market cap company thought it was smart to pick that fight in the first place. Tesla, like other companies in the Muskplex, is very exposed to a vengeful administration, should it choose to let loose (see this). Just as when Musk has gambled with Tesla’s brand and legal exposure in prior episodes of endorsing hard-right politics and touting “funding secured,” the lesson is that he is prone to erratic behavior that can wipe out tens of billions of dollars of value in as much time as it takes to tap out a tweet. In that, he is enabled by a board that has been conspicuous in its silence these past few days.

In short, even if you now think Musk and Trump will just let this all slide, you still own stock in a company run by a man who could quite easily, and needlessly, throw the dice again without warning. And it’s as yet unclear if this act of contrition will be enough to curry special favor with the administration on issues such as regulatory oversight and autonomous vehicle legislation that are central to Tesla’s investment thesis.

The episode threatened to overshadow Tesla’s big robotaxi launch in Austin. Tuesday’s video clip came in the nick of time. Where this vehicle lay on the spectrum of ‘self-driving’ is unclear. While there is no one visible in the driving seat, it looks as if there may be someone sitting in the passenger seat, and the vehicle is also being closely followed by another Tesla. As I wrote recently, Tesla’s robotaxi launch looks likely to involve a limited operating domain twinned with a lot of remote support.

Perhaps more importantly, Musk provided a specific rollout date for the first time, June 22. This is later than the reported target date of June 12 that surfaced in a Bloomberg News story in late May, but still within the targeted month. That said, Musk posted that he was setting this date, just eight days before month-end, only “tentatively.” Note, too, that it is a Sunday, when traffic is quieter.

This is all happening against a backdrop of weak sales in Tesla’s actual main business of making and delivering electric vehicles. The latest figures out of China this week show a drop in May of 30%, year over year. This offers strong evidence that Tesla has a demand problem as opposed to the rationale it offered for weak sales in the first quarter, namely factory downtime to refresh the Model Y. Meanwhile, with less than three weeks left in the quarter, we are yet to see the “more affordable models” Tesla said would begin production of by then.

Come early July, Tesla will likely release another set of weak official sales numbers, followed soon after by what will almost certainly be underwhelming earnings. Of course, a handful of robotaxis may be driving around bits of Austin by then, and Musk may be saying nice things about the president he just trashed. What more could one hope for?