The biggest threat to Tesla is Elon Musk’s other business, X

Elon Musk’s six companies swap resources and leadership in a way that he says benefits all his companies. Three Tesla shareholders, however, have filed lawsuits alleging that shifting employees and chips — not to mention Musk’s already strained time — to his startup xAI has harmed the public carmaker.

But perhaps the bigger threat to Tesla is X, where Musk spent more than two hours last night — after 45 minutes of the product not actually working — fawningly interviewing Donald Trump, whose policies like increased fossil fuel drilling and ending Biden’s electric car push are in direct conflict with the success of the electric vehicle company.

Trump’s “drill, baby, drill,” for example, would bring down the price of gas, one reason people are switching to electric cars in the first place. Trump’s energy policies involve scaling back renewable energy policies in exchange for more of a reliance on fossil fuels. 

“We have to bring energy prices down,” Trump told Musk on Spaces. “Your cars don't require too much gasoline. So you know, you do make a great product, I have to say, I have to be honest. That doesn't mean everybody should have an electric car, but these are minor details.”

Tesla followers would say that’s far from a minor detail. It’s pretty much the raison d’etre of his company.

“We're really headed for an electric vehicle, an autonomous future,” Musk said on Tesla’s first-quarter earnings call earlier this year. “In the future gasoline cars that are not autonomous will be like riding a horse and using a flip phone. And that will become very obvious in hindsight.”

Musk sees the world driving electric vehicles as a main pillar of a sustainable future in which the world no longer relies on fossil fuels. 

But in service of appeasing his guest, Musk appeared to temper his lofty projections, saying it’ll “probably be OK” if we achieve a “mostly sustainable” future “50 to 100 years from now.”

“If we were to stop using oil and gas right now, we would all be starving and the economy would collapse,” Musk said to Trump. “My view is, we do, over time, want to move to a sustainable energy economy, because eventually you do run out of, I mean, you run out of oil and gas. It's not there. It's not infinite. And there is some risk. I think the risk is not as high as you know, a lot of people say it is with respect to global warming.”

Trump has also said he’d get rid of electric car subsidies, which are meant to speed up the transition from fossil vehicles. Many Tesla buyers are eligible for a $7,500 electric vehicle federal tax credit, which brings their price much closer to cheaper competitors. 

When asked on Tesla’s earnings call last quarter about how Trump cutting the Inflation Reduction Act electric vehicle subsidies would affect Tesla’s profitability, Musk responded, “I guess there would be like some impact. But I think it would be devastating for our competitors and would hurt Tesla slightly. But long term, probably actually helps Tesla, would be my guess.” He did not explain how that would work.

One could argue that having Trump on X is a good political move because it could ingratiate Musk — and his companies — to Trump. Of course, that depends on if Trump wins and is faithful to Musk — both big ifs. 

What’s more likely is that platforming a climate-change denier could drive a further rift between Musk and many of his potential customers, who believe that fossil fuels are making global warming worse and that the switch to electric vehicles is one of the answers. 

Tesla is already having trouble finding new customers thanks in part to Musk’s right-leaning rhetoric. Americans who don’t already own Teslas have a very negative view of the company relative to other vehicle manufacturers. 

Presumably, having Trump on X was a way to attract more eyeballs to Musk’s struggling social media platform. But in doing so he may have just torpedoed his much bigger business.