Tesla has been a great American success story. The Tesla model Y is currently the best-selling car in the world. For a new company to surpass the sales of all American and German car manufacturers is breathtaking. But now, Elon Musk is ruining a great company by endorsing Donald Trump, and by focusing on other ventures like X, formerly known as Twitter. Musk is killing the Tesla brand by turning off Democrats. Liberal Democrats have for years been his target demographic. Now they are turned off by Musk’s million of dollars in donations to Trump and with his recent interview of Trump on his social media site.
Rather than allowing Musk a massive salary as CEO, he should be fired. The compensation package that he has been given includes 303 million options to buy Tesla shares at a drastically reduced price. This package is now worth about $50 billion, an outrageous gift to the richest man in the world.
While electric car sales are increasing, Tesla had its first sales decline ever in the first quarter of 2024. This was directly caused by Musk’s support for Trump. According to the Wall Street Journal, Strategic Vision’s data found that just 15% of Tesla buyers were Democrats in 2024, compared with 39% two years earlier.
The University of California at Berkeley found last year that electric car sales were closely linked with political affiliation. The study found that one-third of electric vehicles were sold in the top Democratic voting areas.
There are now bumper stickers that read, “I bought this before we knew Elon was crazy.” Any other CEO who caused a business to tank would be fired immediately. Only the board of directors can fire Musk and they should do it.
In addition to being CEO of Tesla, Musk is CEO of Twitter (now X), SpaceX and Neuralink. One man cannot be CEO of all of these companies at the same time and run them all efficiently. His obsession with Twitter demonstrates his lack of focus on Tesla and other companies.
Musk opposed Trump in 2020 and supported Joe Biden for President. Musk now claims that he supports Trump because of Trump’s border and immigration policies. But the real reason is that the government, including the Securities and Exchange Commission and the National Highway Traffic Safety Administration, are investigating Musk’s companies. Further, Musk hates unions and does not want the United Auto Workers to unionize Tesla.
Trump, of course, is anti-union. Trump has also been against electric cars and against federal subsidies for electric cars. In addition, Trump is a climate change denier. But both Trump and Musk primarily only care about two things: money and power.
Musk created America PAC and is providing it $45 million a month to support Donald Trump’s campaign for the White House. The federal election laws, passed in the wake of the Richard Nixon presidency, originally prohibited such outrageous expenditures on behalf of a candidate. However, the U.S. Supreme Court ruled in the Citizens United case (a 5-4 decision with conservative justices in the majority) that money equalled free speech and that corporations (and later Political Action Committees) had First Amendment rights just like people.
Tesla stock is now selling for 58 times its earnings per share, an exceptionally high ratio. Growth stocks often trade at high multiples, but with Tesla losing market share its price-earnings ratio should fall dramatically. This will hurt Musk in the pocketbook as his 303 million options will decline dramatically in value.
Consumers can send Elon a message by refusing to buy Tesla cars and trucks. The stock market can give Tesla a wake-up call by selling Tesla stock. These actions will alert the Tesla board that new leadership is necessary to save the company.
Joel D. Joseph is a lawyer, an economist and author of 15 books, including “Inequality in America: 10 Causes and 10 Cures.”
From The Progressive Populist, September 15, 2024
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