Look, there's been a big break up this week.
And sometimes in situations like this people say nasty things
that they don't really mean, but also sometimes they say nasty
things that they do really mean. And I get the feeling that we're
in the latter type of situation this time around.
Just six months ago, Elon Musk was on top of the world.
He had funded Donald Trump's election win, jumped around
behind him on stage in a show of support, and had even been given
a civil service job, something to do with procurement, as a
reward for his help. Early on, there were signs that
things might not work out. I feel there's a slight
expression of irritation or maybe even disgust on Trump's
face in the iconic jumping Elon photo.
The biggest sign that things would not last, of course, was
the Jim Cramer tweet. Once Cramer said that he was
bullish on the friendship, you could basically set your watch
to it, knowing that disaster was looming.
At first, though, everything was going well.
Elon Musk tweeted on his version of Twitter that he loved Trump
as much as a straight man can love another man.
And I think that Trump tweeted some positive things about Elon
too on his version of Twitter. But I guess because of all of
the drama yesterday, everyone was trying to see what was being
said on Trump Twitter, and the website crashed, leaving only
this somewhat sad message that there are no truths.
But it did. Please let us know that in this
post truth world that in the event that Donald Trump does
compose a truth, we will be able to find it right there.
So I suppose we should keep an eye out for that.
There's no way around it, though.
Elon Musk was off to a great start in January.
Tesla hadn't really had its best year in 2024.
While it was still being priced as a growth stock, it appeared
to have entirely stopped growing.
The company had just had its first yearly sales decline in
2024. There was growing competition
from the big automotive brands and from new upstarts in China
in the Cybertruck. Tesla's newest model had missed
Elon Musk's stated sales goal by 84%.
Judged on sales alone, the Cybertruck has been more of a
flop than the Edsel. And that's a big deal because
the Edsel has gone down in history as an enduring icon of
failure in the automobile industry.
According to Encyclopedia Britannica, ineffective
marketing, flawed design, a high purchase price, and poor
workmanship led to consumer blowback.
When the Edsel was released in 1957, while Ford had planned to
sell 200,000 Edsels a year, they only managed to sell 63,000 cars
and had to scrap the new brand entirely. 2 years later, Elon
Musk predicted that he would sell 250,000 cyber trucks in the
first year. After all, he had taken a
million deposits. But Tesla ended up selling just
under 50,000 cyber trucks. The failure could possibly be
blamed on ineffective marketing, a flawed design, a high purchase
price, poor workmanship and general thugliness.
But none of this actually mattered, as despite the decline
in sales, Tesla stock rose 62 1/2% and hit an all time high in
2024. I asked Grok, Elon Musk's
chatbot, why the stock had gone up so much despite all of the
bad news and the corporate underperformance.
I figured Grok would be the best person or graphics card or
whatever it is to ask, as Elon Musk has described it as being
scary smart. Grok explained to me that
despite a decline in Tesla's vehicle deliveries, Tesla stock
surged because of Elon Musk's political influence and because
of optimism about Musk's close ties to Donald Trump and his
advisory role within the US government.
Rock said that investors were betting that Musk's influence in
government could lead to favourable regulatory changes
for his businesses. Now I had to ask Rock if it
thought that the investors had been foolish in their optimism,
and it told me that their enthusiasm looks like it was
riding more on hope than on grounded reasoning.
I wasn't really sure about the ethics of the whole situation
either, so I asked Crock if it thought that this was an example
of crony capitalism, and it replied yes.
I'll tell you, life has gotten a lot easier now that I can
outsource my morality to a graphics card.
Despite all of the optimism from a mere 6 months ago and the
promise of the high investment returns associated with crony
capitalism, Tesla stock has been sinking this year and Elon Musk
and Donald Trump have had a very public falling out.
There's been name calling and shocking allegations that you
wouldn't normally expect from two men who normally behave with
such dignity. So how did everything fall apart
so quickly between Trump and Musk?
It seems like only a few weeks ago that Elon Musk was sitting
in on cabinet meetings wearing his Trump was right about
everything had or making everyone laugh with his 420
jokes. I was born 69 days after 420.
Wow, I know, right? 53 years old, I'll tell you,
that guy could really work as a comedian if he wasn't so busy
doing whatever it is that he does.
Despite the great start, last week he announced on Twitter
that his time as a special government employee had come to
an end, and he thanked Donald Trump for the opportunity.
Now, his role as a special government employee only allowed
him to work a federal job for 130 days each year, and that
time was almost up. But his announcement that he was
leaving did come a day after he had said that he was
disappointed with Trump's budget bill, saying that he thought it
undermined the work of Doge, which had managed to cut 2% of
the $2 trillion he had initially claimed he could cut from the
federal budget. The next day, Trump announced on
his version of Twitter. He and Elon use different
Twitters. Everyone does now.
But he announced that Elon would be joining him for a press
conference and that while it would be Elon's last day at
work, he would always be with us, helping all the way.
Trump finished up by saying Elon is terrific.
See you tomorrow at the White House.
The next day, Elon turned up at the White House with a black
eye, which some media outlets have amusingly blamed on Stephen
Miller or Scott Percent. But Musk claims it came from his
child, a serial number. Trump gave him a big gold key to
the White House in a goodbye ceremony, but I get the feeling
that he has since called in a locksmith to change all of the
locks. Amusingly, a guy called Doge
Designer who's one of those accounts that got big on Twitter
by pretending that the stuff Elon Musk makes up is actually
real in order to be retweeted by Elon Musk tweeted out.
In the coming days, legacy media will try to convince you that
President Trump and Elon Musk are no longer friends and that's
why Musk left. He really couldn't have been
more right about that. The news has been absolutely
filled with that exact story. It was very prophetic of Dodge
Designer. So then he got back to
pretending that the stuff Elon Musk makes up is actually real
in order to be retweeted by Elon Musk.
It's wise of him to stick to his knitting.
It's worth noting how difficult the last 24 hours or so have
been for many political influences as they've spent the
last year or so praising both Elon and Trump and now they have
to choose a side. And this decision is fraught
with danger as if they pick Trump and Elon manages to
overthrow him, it's career suicide.
They'll get banned from Twitter and have to get a real job.
If they pick Elon and Trump then ships him off to an El Salvador
prison, well they'll have to delete their tweets rather
quickly and be careful not to leave their homes without a
passport and a long form birth certificate in hand, as you
never know what irreversible mistakes could be made.
Obviously the person in the most difficult position is JD Vance,
as Musk tweeted that he thinks Trump should be impeached and
replaced by Vance. Vance will have to be very
careful picking a side. Back in February, JD Vance was
quick to rush to the defence of a 25 year old Doge staffer who
resigned after he was linked to some racist social media posts.
The Stafford tweeted things like normalize Indian hate.
Now, you would think that JD Vance might have either
condemned these posts or even just ignored the issue.
It's reasonable, after all, to believe that the Vice President
is too busy to know about every HR issue in the government.
After all, there are nearly 3,000,000 federal employees.
That's not what happened, though.
As soon as Elon Musk tweeted his support for the staffer, JD
Vance joined in, possibly momentarily forgetting that his
wife, Usha Vance, is the daughter of Indian immigrants.
It was clearly very important to him to show his support for Elon
Musk. The vice president didn't rush
to pick a side yesterday. He was mostly silent and posted
a photo of himself sitting next to the podcaster Theo Von and
wrote Slow Newsday. What are we even going to talk
about? Musk then replied to Vance with
a laughing emoji in a second post.
Vance followed up with. President Trump has done more
than any person in my lifetime to earn the trust of the
movement he leads. I'm proud to stand beside.
I imagined that Vance, who we all know is obsessed with
politeness and etiquette, is probably torn over who should
have said thank you to who. I imagine he feels that Musk
should have worn a suit more often while at the White House.
After all, he was at the highest office in the country and
refused to wear a suit. And in rap news, even Kanye West
stepped in, urging Trump and Musk to reconcile tweeting
Bruise, please, new. And then there's an icon of
people hugging and it says we love you both.
So much. So the fallout between Musk and
Trump seems to have started when Musk began criticizing Trump's
budget bill a few days ago, calling it outrageous, pork
filled, and a disgusting abomination.
Trump at first avoided directly addressing Musk.
But on Thursday he finally snapped, calling his former
backer crazy, suggesting that he has Trump Derangement Syndrome,
and most shockingly of all, threatening to RIP up his
government contracts. I'm not sure if he stuck one of
those. I bought this before we knew
Elon was crazy. Stickers on the Tesla that he
pretended to buy from Elon at the White House lawn.
But things were getting serious. Now, obviously, from Musk's
perspective, losing his government contracts is the
worst thing that could happen to him.
If you take the crony out of crony capitalism, what's even
left now? I haven't been logging into
Twitter very much over the last year, but as soon as I heard
what was going on, there was only one place to be.
To quote Cliff Asness, the world may be imploding, but it's the
best Twitter Day ever. The partnership between Trump
and Musk began when Musk endorsed Trump last July after
the assassination attempt in Pennsylvania.
Musk then spent $250 million on getting Trump elected, which was
the largest financial intervention in any election in
human history. Musk took credit for the
sweeping Republican electoral victory, tweeting Without me,
Trump would have lost the election, Dems would control the
House, and the Republicans would be 51 to 49 in the Senate.
Such ingratitude, he added. Now I hate to say this, but if
Musk is right in saying that he made Trump, Trump should
probably be a little bit nervous as it's become somewhat
noticeable over the years that pretty much everything Elon Musk
makes burns to the ground. Later that day, Musk posted a
poll on Twitter asking his followers is it time to create a
new political party in America that actually represents the 80%
in the middle? He later retweeted someone who
was calling for Trump to resign, argued that Trump's global
tariff plan would trigger AUS recession, and many people think
that he suggested that Trump was involved in nefarious activities
with Jeffrey Epstein. Now, if you paid attention to
Elon Musk for any length of time, you will remember that
during the Thai Caver lawsuit 6 years ago, Musk explained to a
court that such accusations don't mean much and are common
in South Africa, where he grew up.
There's also nothing new about these allegations.
It's not the nuclear bomb that many in the press are making it
out to be. We know that both Musk and Trump
were in that circle. Everyone's seen the photos of
Musk, which Elaine Maxwell and Trump with Epstein.
In a 2002 profile of Epstein by New York Magazine, Trump was
even quoted describing Epstein as a terrific guy who enjoyed
the company of beautiful women on the younger side.
In my opinion, it's not bringing up the Epstein allegations that
got Trump so upset. The real reason that Trump got
angry about Elon's tweet is that by saying that Trump is in the
Epstein files, Musk was implying that Trump travelled on
Epstein's jet. The implication being that Trump
wasn't rich enough to have his own private jet.
And Trump is hugely insulted that Musk would imply that he's
poor or ever was poor. Trump obviously has the Qatar
bribe jet now, but a big part of Trump's brand over the years has
been the private plane that he's had since the late 1980s,
according to Forbes, which he had his name written on in huge
gold letters so that everyone knew that he had a plane.
It was heavily featured in his reality show where he played a
businessman. The issue is that Trump possibly
knew Epstein in the early 1980s before he had his own plane and
Trump finds it really humiliating that Musk would
bring that to the publics attention.
It was a low blow and I think Musk knew it.
Trump came back with the threat that he would take away the
billions in government subsidies that go to Musks companies.
But then, through the hardest punch that Donald Trump can
throw, he gave Elon one of his trademark illiterate of
nicknames, which always stick and have been known to end
political careers. He called him mediocre mosque
and then told him to go back to Africa.
Now, there's no sharper weapon in the Trump arsenal than an
alliterative nickname and the accusation that someone might be
a migrant worker. Musk, of course, shot back,
tweeting that he would decommission the Dragon
spacecraft immediately, as SpaceX is currently the only US
provider that can transfer astronauts and supplies to the
International Space Station. Musk later walked that back
after some guy on Twitter with 671 followers suggested that he
cool off for a few days before doing anything rash.
And this whole situation led many to question how the US U.S.
government ever found itself in a position where one guy could
threaten the entire US space program because the president
wrote a mean tweet about him. That's not really supposed to be
how things work. As an outsider, the thing that
makes this whole feud so hilarious to me is that there
seems to be no way that these two guys can attack each other
without making themselves look bad in the process.
When Trump accuses Elon of being high, it leads to the obvious
question of why did you allow him to lay off huge swathes of
the federal workforce if you knew that he had a problem like
that? Trump and Musk rely heavily on
each other for power, and for that reason they can inflict
serious damage to each other. Musk might be right that Trump
would not have won the presidency without his funding,
but Musk's money alone wasn't enough to buy the Wisconsin
Supreme Court. While he might have been able to
buy the election, he still needed the right candidate.
Musk might be right that NASA has become too reliant on
SpaceX, but SpaceX is also extremely reliant on U.S.
government contracts. They could each damage each
other, but not necessarily without damaging themselves in
the process. Anyway, the FT reported
yesterday on who the big winners and big losers were 20 weeks
into the Trump presidency. Some of the biggest winners so
far are European defence companies and Chinese tech
giants. In terms of market cap, Tesla
was one of the biggest losers, having lost $304 billion over
the last 20 weeks, and Meta was one of the biggest winners,
having gained $177 billion. Now, Trump never really hid his
distaste for Mark Zuckerberg, but it's possible that by
disguising himself with baggy clothes and gold chains,
Zuckerberg managed to slip under the radar and is becoming the
new Elon Musk. We'll have to just wait and see.
Thanks for tuning into this week's podcast, with special
thanks to those of you who supported on Patreon.
Have a great week and talk to you again next week.
Bye.