The Tesla Die-Hards Who Are Calling It Quits

Summary

WSJ Tech News Briefing: The Tesla Die-Hards Who Are Calling It Quits

Release Date: March 24, 2025

Host: Victoria Craig
Producer: Jess Jupiter
Supervising Producer: Matthew Walls

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1. Tesla Stock Sell-Off: Die-Hard Investors Exit

Overview: The episode delves into the significant downturn in Tesla's stock performance, which has plummeted nearly 40% since the beginning of the year. This decline has led to a wave of seasoned Tesla investors reevaluating their positions, despite CEO Elon Musk's encouragement to hold onto shares.

Elon Musk's Optimistic Outlook: Elon Musk addressed Tesla employees during a recent all-hands meeting, urging them to retain their stock holdings amidst the volatility. He presented a five-year vision that hinges on achieving global regulatory approval for autonomous vehicles, envisioning a future where people can embark on road trips without ever touching a steering wheel. Musk emphasized the transformative potential of Tesla's expanding vehicle fleet, stating:

"It's very difficult for like, you know, people in the stock market... to imagine a future where suddenly a 10 million vehicle fleet has 5 to 10 times the usefulness. It does not compute, but it will compute in the future. So what I'm saying is hang on to your stock."
— Elon Musk at 01:29

Investor Sentiment and Reasons for Selling: Hannah Aaron Lange, WSJ reporter, interviews several long-term Tesla investors who are now parting ways with the stock. Key reasons include:

• Political Disagreements: Some investors are uncomfortable with Musk's political affiliations and his role in the Trump administration, which contrasts with the environmentally focused ethos that initially drew them to Tesla.

• Musk's Public Persona: The increasingly erratic and politically charged behavior of Musk has unsettled investors who expected a more stable leadership figure.

• Impact on Brand and Sales: Concerns that Musk's political engagements might alienate customers or distract from Tesla's core business, potentially harming sales and the company's reputation.

"If you involve yourself deeply in politics, you're going to alienate some customers... Musk's prominent political Persona is hurting the Tesla brand."
— Hannah Aaron Lange at 05:38

Market Dynamics and Tesla-Specific Challenges: The decline in Tesla stock is also attributed to broader market trends affecting the "Magnificent Seven" tech stocks, which have struggled due to risk reassessments, economic uncertainties, and skepticism about AI's profitability. Additionally, Tesla faces unique challenges such as:

• Sales Declines: Recent setbacks in sales figures have raised investor concerns.

• Intensifying Competition: The electric vehicle (EV) market is becoming increasingly crowded, with more competitors entering the space.

• Product Recalls: A significant recall of Tesla's Cybertruck models due to safety issues has further dented investor confidence.

Government Intervention and Its Limited Impact: Despite efforts from the Trump administration to boost Tesla’s profile—such as showcasing Tesla vehicles at the White House and endorsements from government officials—the stock has not seen a sustained positive trajectory.

"It doesn't appear to have turned around things for Tesla quite yet, at least in regards to its share price."
— Hannah Aaron Lange at 05:12

Retail Investor Loyalty: Despite the sell-off, there remains a faction of retail investors who continue to support Tesla, often purchasing shares during price dips driven by their unwavering belief in the company's long-term potential.

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2. Russo Brothers Harness AI to Empower Creativity in Hollywood

Introduction: Transitioning from automotive technology to the entertainment industry, the episode highlights the innovative approach of the Russo brothers—directors behind blockbuster films like "Endgame." Instead of viewing artificial intelligence (AI) as a threat to creative jobs, they are integrating it as a collaborative tool within their production studio, Agbo.

Collaborative AI Integration: Christopher Mims interviews the Russo brothers about their strategy to utilize AI in enhancing, rather than replacing, human creativity. Their focus is on leveraging AI to accelerate the creative process, serving as a companion to creatives in brainstorming and idea generation.

"AI can be a companion when you are coming up with new ideas. There is research to back that up... When they partner with an AI, they will beat both humans and AI on its own."
— Christopher Mims at 07:40

Embracing AI Hallucination: Contrary to the common industry push to minimize AI inaccuracies, the Russo brothers intentionally embrace AI's tendency to "hallucinate" or generate creative, albeit fictional, content. They believe this characteristic can be harnessed to foster novel ideas and innovation.

"Why don't we just lean into that? Like, why don't we use it as a tool to help us come up with new ideas and be creative, rather than trying to do what all these other companies are doing..."
— Russo Brothers at 09:13

Cost Efficiency and Transmedia Strategy: A pivotal aspect of their approach is reducing production costs through the reuse of digital assets across various media platforms. By creating versatile 3D models, sets, characters, and voices, they aim to streamline production processes and facilitate content sharing between movies, video games, theme parks, and future VR mediums.

"The whole idea is it's called transmedia... The whole idea is it's called transmedia. Perhaps there's a future in which Hollywood and video game companies are more closely aligned."
— Russo Brothers at 09:58

Industry Collaboration and Investment: The Russo brothers have garnered significant investment, including a $400 million stake from a Japanese video game maker in 2022, signaling a move towards greater convergence between Hollywood and the gaming industry. Their recent collaboration with Netflix on "The Electric State"—which reportedly cost $320 million—underscores their commitment to high-budget, transmedia projects.

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Conclusion

In this episode of WSJ Tech News Briefing, Victoria Craig and her team provide an insightful exploration into the current challenges facing Tesla, highlighting the complex interplay between leadership persona, market dynamics, and investor sentiment. Simultaneously, the episode sheds light on the Russo brothers' forward-thinking utilization of AI in the entertainment industry, presenting a hopeful narrative that technology can augment rather than diminish human creativity. Together, these discussions offer a comprehensive view of how technology is reshaping both the automotive and creative sectors.

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Notable Quotes with Timestamps:

• Elon Musk on Holding Stocks:
  "It's very difficult for... most people, to imagine a future where suddenly a 10 million vehicle fleet has 5 to 10 times the usefulness. It does not compute, but it will compute in the future. So what I'm saying is hang on to your stock."
  — Elon Musk at [01:29]

• Investor Concerns About Politics Influencing Tesla:
  "If you involve yourself deeply in politics, you're going to alienate some customers... Musk's prominent political Persona is hurting the Tesla brand."
  — Hannah Aaron Lange at [05:38]

• Russo Brothers on AI as a Creative Partner:
  "AI can be a companion when you are coming up with new ideas... When they partner with an AI, they will beat both humans and AI on its own."
  — Christopher Mims at [07:40]

• Embracing AI Hallucination for Creativity:
  "Why don't we just lean into that?... use it as a tool to help us come up with new ideas and be creative, rather than trying to do what all these other companies are doing..."
  — Russo Brothers at [09:13]

• Transmedia Strategy for Cost Efficiency:
  "Perhaps there's a future in which Hollywood and video game companies are more closely aligned."
  — Russo Brothers at [09:58]

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Stay Informed: For a comprehensive understanding of current tech trends, innovations, and industry insights, tune into the WSJ Tech News Briefing daily.

Transcript

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[Victoria Craig]

Welcome to Tech News briefing. It's Monday, March 24th. I'm Victoria Craig for the Wall Street Journal. As some die hard Tesla fans ditch their stock in the company, Elon Musk tells employees they should hang on to theirs. Then the Russo brothers, famed for blockbuster movies like Endgame, are using AI as a creative tool to try to keep it from taking over jobs in Hollywood. But first, don't sell. That was the message from Tesla CEO Elon Musk at a recent all hands meeting where he pitched his five year vision. It included global regulatory approval for autonomous vehicles and Musk said that would lead to people taking road trips without ever touching a steering wheel. He argued that while he remains optimistic, some sometimes stock market investors are too focused on the past to see the future.

[Elon Musk]

It's very difficult for like, you know, people in the stock market, especially those that look in the rear view mirror, which is most people, to imagine a future where suddenly a 10 million vehicle fleet has 5 to 10 times the usefulness. It does not compute, but it will compute in the future. So what I'm saying is hang on to your stock.

[Victoria Craig]

So the reality though is investors have been selling Tesla shares. The stock is down nearly 40% since the start of the year. WSJ's Hannah Aaron Lang has been talking to some of the individuals participating in the sell off. So Hannah, tell us about these people you spoke to.

[Hannah Aaron Lange]

These are folks who were first drawn to Tesla and even to Elon Musk specifically several years ago and bought shares of the stock in because of their faith in the company and what they thought it could do for the future of electric vehicles and then also for technology more broadly.

[Victoria Craig]

And what specifically have some of these investors told you about why they're selling?

[Hannah Aaron Lange]

So you know, some of these folks disagree with Elon Musk politically and his role in the Trump administration. Tesla has certainly attracted in the past a lot of environmentalist types who bought into this kind of techno utopian vision that Musk espoused for clean energy and the electric vehicle transition. As you can imagine, many folks in that group maybe don't identify as conservative in their politics and disagree with Musk in that sense, others have just found his recent behavior as his political Persona has grown just erratic and unsettling. Not necessarily what they would hope for from a chief executive of a company, even if they did share some of his political beliefs. And other folks just thought that the CEO of a company being so involved in the government, potentially alienating some customers, or even just being really preoccupied with a separate project could be bad for sales and bad for the brand.

[Victoria Craig]

And Tesla has been one of the so called Magnificent Seven stocks. One of those tech companies that's really seen as benefiting from AI and it rallied hard last year, but we've seen that reverse this year. What does that tell us?

[Hannah Aaron Lange]

You mentioned the Magnificent Seven. Those stocks have not done as well this year, in part because of just this broader reevaluation of risk throughout the stock market. There's concerns about a trade war, there's concerns about the economy, and even concerns about artificial intelligence. And you know, if it's really going to deliver profits at these companies as promised. Tesla stock is definitely being impacted by those broader market trends. But I do think Tesla has faced some unique problems. The company has seen some hits to their sales, sales numbers. Competition in the electric vehicle industry is intensifying. Some of the investors we spoke to cited those types of concerns. We just heard that Tesla has to recall most of its cybertrucks because a panel on the side of the vehicle could fall off and potentially harm people on the road. So I think that there are Tesla specific challenges, there are Musk specific challenges, and also just broader market dynamics at work here.

[Christopher Mims]

The Trump administration has been unusually involved with helping to bring positive attention to Tesla. Recently the President selected a red sedan from a private showing at the White House. The Commerce Secretary put his own buy rating on the stock on tv and even Elon Musk himself held an all hands meeting at Tesla and told employees to hang on to their shares. What effect has that had on the stock?

[Hannah Aaron Lange]

It seems like neither of these things have had a permanent or super significant impact on the stock. Though the Trump administration has spent time on this, it doesn't appear to have turned around things for Tesla quite yet, at least in regards to its share price.

[Christopher Mims]

Of course there are fans of Tesla, fans of Elon Musk.

[Victoria Craig]

I wonder if any of the investors.

[Christopher Mims]

You spoke to cited that as reasons to be optimistic about owning the stock.

[Hannah Aaron Lange]

Plenty of retail investors still love Tesla stock, right? We've seen a lot of data to suggest that there are still a lot of die hard fans out there who are buying the dip right now and have various points of over the course of 2025. But I think the risk that I heard cited with the individual investors that I spoke to is anytime that you involve yourself deeply in politics, you're going to alienate some customers. I think our reporting suggests that Musk's prominent political Persona is hurting the Tesla brand, and at least some investors are starting to think that could continue to hurt profits as well.

[Victoria Craig]

That was Wall Street Journal reporter Hannah Aaron Lange. Coming up, maybe artificial intelligence doesn't have to replace human jobs after all. Our tech columnist talks to the Russo brothers of Avengers fame, who are working to keep AI's power over the entertainment industry in check. That's after the break.

[Elon Musk]

You don't wake up dreaming of McDonald's fries. You wake up dreaming of McDonald's hash browns. McDonald's breakfast comes first.

[Victoria Craig]

The Russo brothers are famed for directing two Avengers films that became some of the top money making movies in Hollywood history. Now they've set their sights not on another blockbuster, but on building out their production studio called Agbo. They want to use artificial intelligence as a tool to help creatives in their industry rather than train it to be a system that replaces them. Our tech columnist Christopher Mims spoke to the brothers about their studio's AI efforts, which are in the R and D stage.

[Christopher Mims]

So the Russo brothers are taking on artificial intelligence, but they want to work with it rather than against it. So it doesn't eventually replace actors in Hollywood studios. Just walk us through what their plan is.

[Russo Brothers]

So one thing that's been happening in Hollywood and video games lately is folks are using AI to eliminate the jobs of concept artists. For example, they'll replace them with AI, image generation tools and voice actors because they'll use AI, clones of actors, voices. The fear is that eventually we'll just start using AI to generate movies themselves. And so the Russo brothers whole idea is we don't want to leave the future of AI in filmmaking in the hands of tech companies because they will be dastardly in how they use it. And they want to try to use AI to, for example, accelerate the creative process. Now, they're pretty vague on what that looks like, but based on previous interviews with their chief scientist, Dominic Hughes, it sounds like they believe that AI can be a companion when you are coming up with new ideas. For example, there is research to back that up. It comes from a totally different part of the economy. Business professors have noticed, for example, that if you ask students to generate ideas for new companies, they will generate more ideas and more creative ideas. When they partner with an AI and they will beat both humans and AI on its own.

[Victoria Craig]

One of the things I found fascinating is that the Russo brothers want AI to hallucinate, which is effectively making stuff up. Which when we talk about AI and other applications in life or business, we don't want that to happen. We want it to really be factual. We want it to be accurate. Right?

[Russo Brothers]

Absolutely. So it's always important to remember that hallucination is what generative AI does. You can't separate hallucination from how it functions. And so their chief scientific officer has said, why don't we just lean into that? Like, why don't we use it as a tool to help us come up with new ideas and be creative, rather than trying to do what all these other companies are doing, where they're like, please stop hallucinating, even though that's your core nature, and please just give us accurate search results. And of course, we've seen how that is going. Google itself is getting polluted with all kinds of nonsense search, generative results.

[Victoria Craig]

Another thing you mentioned in your piece is that one of the most important aspects of this is that it's low cost. So walk us through that concept.

[Russo Brothers]

So the Russo brothers, like everybody, are super aware that production cost and movies in video games, even in things like theme parks, just keep going up and up. There's some irony here because it's rumored that Netflix spent $320 million on the Russo brothers most recent film, the Electric State, which went straight to streaming and is probably the most Netflix has ever spent on a movie. Their thesis is if you're creating so called digital assets, so like 3D models, sets, characters, maybe even voices, why not reuse them in a movie, in a video game, in a theme park, and some other future VR medium that we haven't even invented yet. And that way you can cut down on production costs kind of in aggregate across all these media. The whole idea is it's called transmedia. Perhaps there's a future in which Hollywood and video game companies are more closely aligned. There is a Japanese video game maker which invested $400 million in the Russo Brothers studio in 2022. So suggests that kind of convergence is coming.

[Victoria Craig]

That was WSJ columnist Christopher Mims. And that's it for Tech News Briefing. Today's show was produced by Jess Jupiter with supervising producer Matthew Walls. I'm Victoria Craig for the Wall Street Journal. We'll be back this afternoon with TNB Tech Minute. Thanks for listening.