Does a Musk-owned Twitter darken Tesla’s star?

When risk expert Andrew Maynard looked at Elon Musk’s businesses, he saw consistency. Musk’s companies do a lot of things, including Tesla Inc. making electric and self-driving cars, SpaceX developing rockets, and the Boring Co. drilling tunnels. They all seemed to fit into a larger vision of sustainability on Earth. and the extension of civilization beyond the Earth.

Then Musk said he would buy Twitter, and now Maynard isn’t sure it’s all cohesive yet.

“What has always impressed me about Musk is that there’s always a long-term strategy,” said Maynard, a professor at Arizona State University who studies how companies assess risk. “Twitter obviously doesn’t fall into that pattern, and you can’t see any long-term strategy behind that.”

A question lurking behind Musk’s bid to buy Twitter this week is whether the disconnect will affect the prospects of Tesla, the company that is the backbone of Musk’s fame, wealth and credibility. . It also made 75% of electric vehicles sold in the first quarter of this year, according to Kelley’s Blue Book. Its capabilities and reputation affect the adoption of electric vehicles and the global climate change curve.

More than at any automaker, the company and the CEO are synonymous. Tesla is how the Musk brand is made tangible in people’s lives, in the form of the vehicles on the road and the inventory people buy. So what happens when this CEO is distracted and intimately tied to a top social media platform?

Those who watch Tesla and Musk say it’s too soon to decipher whether it’s good, bad or neutral that the chief executive of the world’s most valuable automaker also owns one of the world’s most politically charged media properties. .

But they agree on one thing: at least in the short term, it has made Tesla’s future more murky and complicated.

“If your reputation is based on the ability to solve complex problems, then any acquisition poses reputational risk,” said Michelle Lyng, president of Novitas Communications, a public relations firm. “Not only does this acquisition threaten Musk’s reputation as a master of execution, it also has the potential to cross-contaminate the positive reputation of his other successful brands, like Tesla.”

Twitter’s potential to draw Musk into controversy was highlighted yesterday. Musk tweeted that Twitter’s blocking of a news site was “completely inappropriate,” despite a recently uncovered securities document that prohibits Musk from speaking ill of Twitter or its executives, according to Bloomberg.

Tesla investors so far seem unhappy with Musk’s potential takeover of Twitter. Shares of the company fell nearly 12% yesterday, although Tesla has already seen deeper lows and rebounded to new highs.

Twitter and other outlets were also rife with possible risks that Musk could encumber Tesla with.

Will the controversial task of reinventing Twitter distract Musk from his massive growth goals at Tesla? Should Tesla and Twitter drivers worry that one company’s Musk agenda will pervert another’s agenda? Will the passionate opinions people bring to Twitter affect how they view Tesla?

Musk’s bid to own Twitter isn’t a sure thing. The proposal has been approved by Twitter’s board of directors but must be accepted by shareholders. Musk also needs to pull together a giant $44 billion funding package, which The New York Times reported is a combination of debt, loans that could claim his Tesla stock as collateral, and $21 billion that Musk has to pay himself.

New enemies, new friends

Early signs are that the prospect of Musk leading Twitter is creating the potential for new allies and foes. It is unclear if these feelings will persist and stick with Tesla.

Musk’s desired changes to the social media platform are expected to be controversial. Musk wants to make the service more transparent by publishing the algorithms that rank its content and verifying who its users are. Musk is also a free-speech libertarian who wants to remove rules that have stopped sources of misinformation, such as those related to the pandemic and climate change, and ban the activity of certain users, many of whom are conservatives. policies.

“Free speech is the foundation of a functioning democracy, and Twitter is the digital public square where issues vital to the future of humanity are debated,” he said.

Musk’s rise has been cheered by right-wing figures, from Fox News’ Tucker Carlson to Sen. Ted Cruz (R-Texas). The Wall Street Journal’Musk’s editorial board hailed Musk’s ownership as “a gamble that could shatter Silicon Valley’s progressive compliance culture.”

Others are alarmed. Brandon Farmahini, a top podcaster, got nearly 1,000 likes for a Tweeter saying he had canceled a reservation for Tesla’s Cybertruck because “I will not fund Musk’s efforts to reinstate Russian disinformation on Twitter under the guise of ‘free speech’.”

Tesla owned by the same person as Twitter also raises questions about what will happen if the two companies’ agendas collide. Tesla did not respond to a request for comment.

Jeff Bezos, the founder of Inc. and a rival to Musk in the space race, raised this prospect. On Twitter, he mentioned China, which limits free speech but is Tesla’s second largest market. “Has the Chinese government just gained some influence in the town square?” Bezos asked.

Another possible conflict concerns client confidentiality.

“Now Musk alone apparently has access to the private communications of millions of people,” wrote Evan Greer, director of Fight for the Future, a digital privacy advocacy group, referring to Musk’s new role at Twitter. Many Twitter users communicate privately through direct messages.

She asked, “What if a government relies on Musk for access? What if it’s in a country where Tesla hopes to do business? »

The Distracted CEO

It’s unclear how Musk’s new project will affect how Tesla operates, or whether the distraction will dampen the automaker’s aggressive plans.

Tesla’s circuits are highly charged. The company recently postponed the rollout of two highly anticipated models, the Cybertruck and the Roadster, to next year as it is absorbed by the ramp-up of two new factories in Germany and Texas. And the pace does not slow down. Musk said two other attention-intensive products — a dedicated robotaxi and a humanoid robot called Optimus — will also arrive within the next two years.

Musk has few obvious lieutenants. While traditional automakers often have dozens of senior executives, Tesla lists just two: Zachary Kirkhorn, the chief financial officer, and Andrew Bagolino, the powertrain development manager. These men have recently taken on more prominent speaking roles on the company’s earnings calls, but when it comes to the big picture, they generally defer to Musk.

This raises the question of how important a man’s contribution is to a 19-year-old company with around 100,000 employees.

“When businesses are small, they kind of get run by entrepreneurs, and then they become more institutionalized,” said Joel Levin, executive director of Plug In America, a nonprofit that promotes the use of electric vehicles. . “I think Tesla made that leap to a large extent.”

Levin guessed that Musk’s deeper involvement with Twitter might not have much effect on perceptions of Tesla, in part because Musk is already a well-known voice on Twitter with 85 million followers. “When he has an opinion to share, it’s not like he’s going to have any more access to Twitter than he already has,” Levin said.

But the risk remains.

“Is Tesla at risk of being discredited? I hope not,” Levin said. “I guess it depends on what he does with it.”

Comments are closed.