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In a dramatic turn of events in the midst of their historic feud, former US President Donald Trump publicly endorsed Elon Musk’s Tesla on Thursday, even as tensions had risen recently and the electric automaker has faced financial troubles.
Taking to Twitter, Trump stated, “I want Elon, and all companies in our Country, to THRIVE.” His tweet was a notable departure from his earlier position, which involved threats to remove government subsidies from Musk’s companies in light of political differences.
But Trump’s support was not sufficient to keep Tesla stock afloat. Stock fell close to 9% by Thursday midday after posting underwhelming second-quarter earnings. The automaker saw a 12% decline in revenues and 16% decrease in profits in the April-to-June period. CEO Elon Musk issued a cautionary warning of “a few rough quarters” ahead, a sign of uncertainty for the electric vehicle giant.
Investor anxiety has been heightened by Musk’s growing outspoken engagement with right-wing politics, which has led some to speculate that it is scaring off potential buyers. Tesla is also under heightened competition from European and Chinese competitors, further testing its market leadership.
Disputes between Trump and Musk intensified in recent times after Trump’s budget bill cleared Congress, which had the potential to eliminate the $7,500 EV tax credit and lower Tesla’s revenue from regulatory credits. Tesla also estimates it will lose hundreds of millions from new tariffs applied on imports from nations such as China and Mexico.
Despite these difficulties, Trump tried to reach out in a conciliatory note. “Everybody is saying that I will kill Elon’s businesses by depriving him of some or all of the giant scale subsidies he enjoys…” This is not so!” he emphasized the significance of healthy indigenous businesses to the overall US economy.
Musk has criticized Trump’s economic policies, however, referring to the budget as an “abomination” and expressing concerns regarding the national debt. He even suggested considering the creation of a new political party as a response.
Musk changed the tone during Tesla’s Wednesday earnings call from sales of traditional cars to the future of the company in autonomous vehicles and robots. Tesla has started deploying a robotaxi service in Austin, Texas, and plans to roll it out in other cities later this year, subject to regulatory approval. Musk predicts that by the end of next year, at least half of the US population may be able to use Tesla’s self-driving fleet.
In spite of the impending trouble, Musk was sanguine. “Once you achieve autonomy at scale in the second half of next year, at least by the end of next year, I would be surprised if Tesla’s economics are not very compelling,” he said.
While Tesla is pushing through political headwinds and shifting business model, Trump’s unsought endorsement may be the calm before another storm or a temporary truce.
