What a year for Elon Musk! In one year, the man who was the richest man in the world lost that status and saw his fortune go from 270 billion to 140 billion dollars. The main cause? Electric car maker Tesla, of which it is the main shareholder with 13% of the capital in addition to being the leader, saw its share price plummet by more than 69% over the year.
But if Elon Musk deserves the title of person of the year 2022, it is for his acquisition of Twitter for 44 billion dollars, filed in April. Unexpectedly, the acquisition turned into a soap opera with many twists and turns, the businessman trying to give up signing the contract and overload Twitter’s management to the point of taking the case to court, before finally taking control of the social networks. network to impose brutal leadership on it. Already more vocal than his fellow billionaires, Elon Musk has multiplied public statements to promote his conservative political views, sometimes at the expense of his portfolio of companies (Tesla, SpaceX, Neuralink and The Boring Company).
The image of genius scratched since the acquisition of Twitter
Elon Musk started the year proud of the resounding successes of his two main businesses, the electric car manufacturer Tesla and the space company Space X, to the point of comparing himself to Tony Stark, the billionaire superhero and genius inventor behind the armor of Iron Man. So when he made his bid to become Twitter’s sole shareholder at a price of $54.20 per share, well above the market price, pundits looked for a logical explanation. Why would the brilliant businessman buy a company that has struggled for more than a decade to find its economic model? The billionaire was very vague about the game, and barely outlined a project – dubbed X – which would consist of transforming the social network into a superapplication, through which payments would pass, like WeChat in China.
But once the billionaire took the helm of Twitter, he began to describe it as a liquidity hole, in such dire financial straits that he would risk declaring bankruptcy – even though the company regularly managed to break even before the bailout. With this justification, Elon Musk repeatedly cut the group’s staff to the point of laying off more than 60%, closed offices abroad and renewed almost all management staff. All this, commenting on each decision with several tweets. As for the ambitious super app project, it’s stuttering. The company urgently implemented the redesign of Twitter Blue (an 8 euro subscription that was supposed to serve as the cornerstone of the payment system), but had to withdraw it several times due to malfunctions, before it was finally implemented a month and a half later.
Musk has been building an image of a hard worker for years, on which he bases himself to demand intense work rhythms from his employees. Musk sleeps on the floor of Tesla factories, dabbles in engineering and acts as his companies’ main lobbyist. His extreme method instinctively seemed to work: SpaceX’s reusable shuttles bring astronauts to the international space station, while Tesla has added a new dimension to the electric car market. But in the case of Twitter, Musk simply appears to be browsing by sight, picking up submissions from users unrelated to the company, which he calls ” interesting “.
Worse, the brilliant Elon Musk has revealed his flaws. His speeches on Twitter’s public audioconferences – the Twitter Space – suggested a leader unable to respond to criticism, preferring to withdraw from the discussion or have his interlocutor expelled. The billionaire’s image was affected, and he himself put the nail in the coffin: in December, he asked through a poll on Twitter – which incidentally does not respect any of the necessary protections to have rigorous results – if he should leave his position as leader of the network Social. 58% of the 17 million voting accounts (about 12% of his subscriber numbers) expressed their desire for him to leave. Elon Musk said that he would start looking for a person for the position, but that he would continue to take care of the software and servers, that is, the core value of the social network.
Tesla, neglected and in disrepair
Since the billionaire took control of Twitter in late October, Tesla shares have fallen 47% and have fallen below $200 for the first time since November 2020. Over the course of the year, that collapse rises to 69.5%. At issue: the new leader seems sucked in by political issues, and is accused of abandoning the automaker’s management. How did he self-qualify ” neither left nor right “, the powerful billionaire called to vote in the Republican field during the American elections of intermediate exams, and he spends his days commenting on and relaying publications from the conservative camp. To support his ideological struggle, he opened Twitter’s internal archives to a handful of journalists. against the general opinion ”, with the aim of exposing the inconsistencies and contradictions of the former direction of the social network. Playing with the limits of conspiracy, the series of articles called Twitter Files analyzed the banning of figures of the American extreme right like Donald Trump or the censorship of misinformation about the Covid-19 pandemic.
That compromise is frowned upon by some Tesla shareholders because the company has been through turmoil and doesn’t need additional controversy. For starters, its production has slumped in China, largely due to the government’s extreme anti-Covid policy, which has shut down its Shanghai gigafactory. After a brief return to normality, production will slow down again in January, against a backdrop of a dramatic resurgence of the epidemic in the country. So, its projects, like the Cybertruck and the Roadster, announced years ago, still don’t have a production date. Only the semi-trailer, announced three years ago, went into production. As for the Tesla car range, it receives updates but does not have a new top of the range to highlight, while the historic manufacturers (Mercedes-Benz, Volkswagen, Hyundai, Kia…) bet on their market segment, which the Chinese market starts to be invested by local manufacturers, and that its direct competitors (Rivian, Lucid, etc.) are maturing.
Tesla is still the broad leader in its market (65% share, 14 points less than in 2020), but will have to prove in 2023 that it has the tools to stay that way. And to achieve this, shareholders require a 100% committed Musk. The latter denies dispersion, but his numerous Twitter messages suggest otherwise. It’s far from too late for Tesla to turn the corner: The company made $3.3 billion in profit in the third quarter, and while it may not hit its incredible 50% annual growth target, it doesn’t. However, it remains on a positive trajectory.
Neuralink and The Boring Company, two balls in formation?
But Elon Musk doesn’t just have the Tesla situation to manage. As the gem loses its luster, your less successful investments become more visible. Starting with Neuralink, a company created in 2016 that aims to develop brain implants for neurological purposes, for example, to combat paralysis. Beginning of December, Elon Musk finally presented the next step for his ambitious project: the launch of human tests in the second quarter of 2023, even if the company is still waiting for the necessary authorizations for the moment. But a few days after the keynote conference, Reuters revealed that the company was under federal investigation, prompted by reports of animal abuse. Specifically, Neuralink is accused of rushing its tests and thus causing preventable suffering and death to test subjects. According to the news agency, at least 1,500 animals have died as a result of tests since 2018, including 280 sheep, pigs and monkeys. If this number does not constitute proof of abuse in itself, it is corroborated by internal testimonies that make the connection between failed experiments and pressure on product development. Elon Musk is said to have repeatedly hinted to employees that Neuralink could shut down if progress isn’t fast enough. The company has already missed several deadlines, and it is taking time to deliver.
Although Neuralink’s situation does not look good, it is still doing better than The Boring Company. Furthermore Founded by Elon Musk in 2016, this company builds tunnels, with the promise of driving autonomous high-speed buses through them, to avoid traffic jams on the surface. Problem: The first project, a 2.7-kilometer tunnel inside the Las Vegas Convention Center, completed in 2020, turned into a fiasco. For starters, it’s only accessible for a limited number of days and only by conference attendees. Then, the shuttles that circulate there are neither fast (50 km/h, far from the promised 240 km/h) nor autonomous, since they are simply Tesla Model 3 driven by drivers. Even worse, traffic jams form in the tunnel at peak times, meaning the project is not living up to its original promise. But it was only at the end of November that the wall street newspaper exposed the extent of the disaster.
US cities that have signed contracts with the boring company, as Los Angeles, Baltimore and Chicago had to give up building their tunnels. In the case of Chicago, Musk’s company asked for a budget extension of US$ 455 million, when originally the city was supposed to pay only US$ 45 million. Other cities were simply ignored by society despite their reminders. In other words, The Boring Company greatly underestimated the cost of its projects, as well as greatly overestimated its production capacity, resulting in the cancellation of almost all of its sites. In addition, it no longer promises that its buses will be autonomous.
Fortunately, in Elon Musk’s corporate crisis, one company still remains untouched: SpaceX. In 2022, the company accelerated the deployment of its Starlink satellite constellation, the largest of its kind, intended to deliver Internet to disconnected territories. The company announced that it surpassed the mark of one million subscribers to its service in December 2022. It is still not enough to cover the costs of its investment – estimated in 2018 at more than ten billion dollars -, but enough to show interest in offer. But at the same time, Crew Dragon shuttles continue to ensure the rotation of the international station’s crew: SpaceX has established itself as a must in the industry. And for now, Elon Musk’s setbacks don’t affect him.