Musk Encounters Significant Challenges as He Transitions from Washington to the Business Realm

NEW YORK (AP) – Elon Musk departs Washington after a short but tumultuous stint in government, returning to his vast array of businesses, each grappling with its unique challenges.

Starting with Tesla, his electric vehicle company. Meanwhile, How many Musks have achieved President Donald Trump’s role as the principal cost-cutter remains a topic of controversy. Nonetheless, it is evident that his alignment with right-wing politics has harmed the Tesla brand and decreased sales.

Musk’s social media platform, X (formerly Twitter), is in dire need of revitalizing its advertising revenue. Contrary to this, his aerospace venture, SpaceX, appears financially robust, albeit facing some recent setbacks. Additionally, it’s uncertain whether his satellite venture, Starlink, can maintain its advantageous deals now that Trump is less involved.

Let’s take a closer look at some of Musk’s primary enterprises.

Tesla Trouble

Profits at Tesla plummeted 71% within the first quarter as Chinese competitors emerged as the world’s leading electric vehicle sellers.

The pressing question now is: Will leaving Washington entice buyers?

Many are still uncertain, making the answer critical in revitalizing profits. Tesla’s vehicle lineup is aging, and its foreign competitors are becoming increasingly competitive. They will capture market share from Tesla, even under optimal conditions.

The decision to shut down the factory played a significant role in the company’s first quarter struggles, as it upgraded its top-selling Model Y, among other temporary setbacks. However, the impact of the Washington phase has raised concerns among analysts and investors.

In a note to clients, JP Morgan cautioned about “unprecedented brand damage.” Wedbush Securities remarked, “This is a completely blown-away crisis.” Furthermore, on Wednesday, a small group of investors urged Tesla’s board of directors for Musk to dedicate more than 40 hours a week to restore “a declining global reputation” amidst other challenges.

The news from Europe this week was also disheartening: April sales fell by half.

Taxi Without a Driver

Another significant trial for Musk: Will the launch of Tesla’s first driverless taxi prove successful?

Musk has been discussing Robotaxis for over a decade, and next month, they may finally hit the roads. He has pledged to test 10 or 20 Robotaxis in Austin, Texas, before expanding to hundreds of thousands by the end of next year.

“Can you sleep in our car and wake up at your destination?” Musk posed to investors during a conference call last month, asserting, “I’m confident it will be available in many U.S. cities by year’s end.”

Investors seem optimistic about Musk delivering, evident from a 50% surge in Tesla stocks following his statement. Yet, he faces numerous challenges, particularly ensuring that these taxis operate safely and do not collide with obstacles or individuals.

Federal safety regulators requested data from Tesla last month on how Robotaxis function in low visibility conditions. This request follows an investigation into several accidents last year involving Teslas that resulted in fatalities, including pedestrians, with the software for fully automated driving.

Even if Austin’s testing proceeds without incidents, Musk still confronts another competitor: Waymo.

The driverless taxi service from Google’s parent company, Alphabet, has just reached 10 million trips and is operational in cities like San Francisco and Los Angeles.

Advertising Comeback on X?

Since Musk acquired Twitter in 2022 and opened it to various conspiracy theories, longstanding advertisers began to abandon the platform. Musk exacerbated the situation by threatening to “out” them and even taking legal action.

Advertisers are returning now, but the reasons may not be entirely favorable.

“Some major brands resumed spending on X to curry favor with the Trump administration or avoid potential backlash from Musk,” stated analyst Jasmine Enberg. “However, fear is not a sustainable motivator, and most are investing less than they did prior.”

While there is hope that X’s advertising business will recover this year, it remains significantly smaller than under Musk’s management.

Rockets Red Glare

The performance of Musk’s rocket company, SpaceX, remains unclear, as private firms do not disclose their financials. However, recent news cycles reflect both challenges and successes.

Firstly, a troubling development occurred this week with the spinning explosion of one of the mega rocket’s spacecraft in the Indian Ocean. This follows earlier incidents where two other spacecraft exploded, scattering debris into the Caribbean Sea.

In reaction, Musk immediately vowed to conduct more testing; however, the stakes are high, and time is of the essence. NASA aims to utilize this spacecraft for future lunar missions, which involves attempting an orbit around the moon and bringing four astronauts home.

On a brighter note, investors peeking into SpaceX’s finances are evidently enthusiastic.

Reportedly, a recent private stock sale followed the company’s private funding round a few months ago, raising SpaceX’s valuation to $350 billion, up from $210 billion just a year ago.

It’s Business, Not Politics – Or Is It?

Starlink, Musk’s satellite internet division, continues to forge impressive international agreements, yet the extent to which these connections might be influenced by cold business calculations versus political factors remains uncertain after Musk’s departure from Washington.

Following Trump’s visit to Saudi Arabia earlier this month, Musk unveiled that the country has authorized Starlink Services for aviation and maritime applications. This came in the wake of regulatory approvals from Bangladesh, which has been grappling with Trump’s proposed tariffs impacting its clothing sector, along with recent agreements in India, Pakistan, and Lesotho.

Next in line: possibly South Africa.

After Trump’s Oval Office address earlier this month, the country’s regulators eased rules that could benefit Starlink’s entry. Musk criticized requirements mandating partial black ownership in new international ventures as “openly racist.”

The country denies any political influence on that decision.

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Associated writer Barbara Ortutay contributed to this San Francisco story.