Can it last?
This is the question many sensible people are asking about the position of Elon Musk in the Trump administration.
Sceptics might well point out that Musk has lasted longer than many appointees did in Trump’s clownish first administration. But none of them had the strange hybrid status of Musk – with one foot in the White House and the other in corporate American enterprises such as SpaceX and Tesla.
It is good to remind ourselves of some aspects of Musk. He recently suggested that the result of the last UK general election should be reversed by the simple expedient of King Charles III removing Keir Starmer from office.
He intervened in German politics by urging German voters to support the anti-EU Alternativ Für Deutschland party (AFD). One can only guess what interventions he will be tempted to make in other future EU member state elections.
The only serious metric of overall political success and effectiveness in the mind of Donald Trump (if I can use that term meaningfully) is the state of the US stock market – a market that increasingly resembles an overheated Ponzi scheme where vast quantities of paper wealth seek roosting ledges like seabirds on vertiginous economic cliffs.
There is, for some, a delicious irony in the huge financial gains made in the last week by US hedge funds short-selling Tesla shares. The Financial Times reports this week that they have made $16.2 billion on foot of the collapse of the Tesla share price which had risen from less than $200 to peak at more than $450 in the aftermath of the November election. Previous short sellers of Tesla shares had lost more than $64 billion in 2024 as investors piled on to the Tesla bandwagon.
Vagaries of hedge fund speculations excite little sympathy or enthusiasm from most people – especially those who watched the Big Short movie. But the damage that Musk is doing to his Tesla enterprise has hit home. It even provoked Donald Trump to pretend that he was personally buying a Tesla in a much-publicised tyre-kicking stunt at a newly designated White House portico sales forecourt.
Trump, who campaigned by frequently deriding electric vehicles (EVs) and their owners, is now trying against the odds to sell Teslas to the loyal fan-base which enthusiastically cheered his “Drill, Drill, Drill” call for the expansion of hydrocarbon-driven vehicles. In fairness, Trump may not be licensed to drive but he has pioneering experience in the use of battery-powered vehicles – on the golf course.
Sales of Teslas outside the US – especially in Europe and Canada – have plummeted as Musk’s reputation has tarnished their gloss. Investors in Tesla stock have lost huge sums in the paper value of their portfolios. Some are even calling for Musk to quit politics. If he is minded to exit, he will quite likely do so suddenly and will explain his departure by claiming that he has accomplished his DOGE goals and that his chainsaw role is complete.
Of course, he still has his interests in SpaceX and Starlink – as he has pointed out to would-be boycotters in Canada. But a halving of his Tesla share price and reports that JP Morgan predicts an end-of-year value of as low as $120 for its shares currently trading at more than $230 is a poor lookout.
Musk is reported to be focusing on the Indian market, but he will face serious competition there from Chinese and other Asian EV producers.
Musk labelled previous unsuccessful short sellers as “insane” and insists that the company will recover as pioneers in autonomous vehicle technology. But it is hard to see US investors share his optimism or him cornering and retaining the market in autonomous vehicle revolution, if and when that occurs.
The resumed Israeli destruction of Gaza, agreed in advance with the Trump administration, and the newly restarted US bombing campaign against the Houthis may appear as Trump flexing military muscle. Neither event, by itself, will affect the Dow Jones or Nasdaq indices. It seems safe in terms of exposing American lives or share prices by military intervention. From the safety of an American cockpit, innocent Arab lives just don’t matter. Extending air war to Iran may be tempting as a risk-free option as well.
But Trump’s other front – the tariff wars – is not politically or economically risk-free. Recession, even temporary, may spook the stock markets. Tariffs on steel and aluminium will raise production costs in the US from Boeings to beer cans – and lots more inflation in between.
Trump’s much-vaunted “art of the deal” skill now seems totally absent in US dealings with Putin over Ukraine. Making concessions as a precondition for negotiation is poor strategy. In the end, his deal-making skills proved utterly illusory in the case of North Korea’s Kim Jong Il. Easier and less risky, then, to kill defenceless Arab children.
