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.