Elon Musk, following his dramatic “break-up” with U.S. President, Donald Trump, expressed that he would now launch a third political party to challenge and defeat the traditional 1v1 between the Democrats and the Republicans. The announcement didn’t sit well with the investors.
Analyst Gautam Mukunda of Tufts University, commented on this by highlighting the significance of “The Musk Magic” for Tesla’s share and standing, and warned about the fact that Tesla could suffer heavily, especially given the case that the investors believe that Musk has found other priorities than “Technology”. Makhunda went on that as evident by the recent development, it’s not the leading production of self-driving cars or robots that keeps Tesla upwards in the stock market but its Musk’s reputation for having a tunnel-vision dedication for delivering groundbreaking tech ideas.
In a way, this concern points out a very fundamental vulnerability of tesla; “It’s all about musk’. The company does not thrive upon its delivery of constant innovation or invention. It stays ahead in the game, playing on Musk’s reputation that speaks authority within the technological sphere. The company is never judged on traditional auto industry fundamentals. Investors take a punt on Musk, the man behind the historic success of spaceX.
This unfolds a philosophical perspective, the “Musk Premium” is as much of an Achilles’ heel for Tesla as it is its greatest asset. As Tesla’s leading competitors in the E-vehicle industry, GM and Ford struggle with delays in launching new models, missing key delivery targets, and quality issues.
Tesla remains a leading profitable entity for its investors amid facing fierce competition and intensifying expectations. How come? Because the product, delivery, timely innovation or trend have no value for the investors, as long as Elon Musk is as committed to Tesla as he ever was.
The point is, politics cannot be a side hustle while one focuses on their full time job and Tesla investors seem to see this through. Unlike a pet project or a side startup, politics would require Mr. Musk’s constant attention and public engagement, affecting his focus on Tesla. Historically, Tesla’s stocks suffer a drastic dip whenever Elon Musk is perceived to be putting more attention to SpaceX, X (previously Twitter) or other adventurous ventures. In this way, a full-blown political campaign would hit Tesla with a major dent that wouldn’t be easy to repair.
