Musk’s Politics Dent Tesla’s Appeal

Summary

WSJ What's News Podcast Summary

Episode Title: Musk’s Politics Dent Tesla’s Appeal
Host: Luke Vargas, The Wall Street Journal
Release Date: March 7, 2025

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1. Geopolitical Tensions and US-Israel Relations

US Threatens Joint Action with Israel Against Hamas

The episode opens with a discussion on the escalating tensions between the US, Israel, and Hamas. Nearly a week after the expiration of an Israel-Hamas ceasefire, the US has threatened joint military action with Israel unless Hamas releases all hostages from Gaza.

• Steve Witkoff, President Trump's Middle East envoy, expressed hope for a diplomatic resolution while acknowledging the potential for military intervention:

  "What's going to happen? I think there's going to be some action taken jointly with the Israelis... Hamas has an opportunity to act reasonably, to do what's right, and then to walk out." (01:26)

Despite the Trump administration's recent direct talks with Hamas—its first public negotiations since the war's onset in October 2023—Dov Lieber, a Journal correspondent, explains that these negotiations are straying from the previous ceasefire framework established under the Biden administration:

"Israel is hoping the US can help it force Hamas to release more hostages... without agreeing to any kind of ceasefire or making any kind of strategic retreats from the Gaza Strip." (02:10)

Upcoming US-Ukrainian Talks in Saudi Arabia

In parallel geopolitical developments, top American and Ukrainian officials are set to meet in Saudi Arabia next week. This meeting aims to pave the way for potential peace talks with Russia, marking a possible healing of relations between Kyiv and Washington. The move comes after Ukrainian President Volodymyr Zelensky's conciliatory remarks following a contentious Oval Office meeting with President Trump.

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2. Business News: Walgreens' Major Buyout

Walgreens Goes Private Amid Struggles

The podcast highlights Walgreens' recent agreement to a $10 billion buyout by Sycamore Partners, signaling the end of an era for the embattled drugstore chain. This valuation is starkly lower than Walgreens' worth a decade ago, indicating significant financial challenges.

Joseph Walker, a pharmaceutical reporter, provides insights into the implications of this deal:

"A lot remains to be seen as to exactly how Sycamore will go about this... The company plans to close about 1,200 stores over the next few years and potentially split its various divisions." (03:40)

The agreement has positively influenced Walgreens' share price, which climbed to nearly $11.45 in after-hours trading—the price Sycamore agreed to pay.

Impact on the Market

In addition to Walgreens, the podcast touches on China's weaker-than-expected exports for the first two months of the year, growing only 2.3% year-over-year compared to the forecasted 4.5%, amidst rising trade tensions with the US.

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3. Cryptocurrency Developments

Trump’s Executive Order and Crypto Market Reaction

The cryptocurrency market is buzzing following President Trump's executive order to establish a strategic Bitcoin reserve. Initial confusion arose as Trump hinted at including other digital currencies like Ether, XRP, Solana, and Cardano. However, the final order clarified that only Bitcoin would see new purchases, while other cryptocurrencies would be held from seized assets.

The White House is set to host its first-ever crypto summit, signaling a significant step in mainstreaming cryptocurrency within federal strategies. Additionally, the Labor Department is slated to release its February jobs report, and Fed Chair Jerome Powell is expected to make his last public remarks before the Fed's next rate decision.

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4. Tesla’s Declining Appeal Amid Elon Musk’s Political Stance

Shift in Tesla’s Brand Perception

A significant portion of the episode is dedicated to Tesla's waning market appeal, directly linked to Elon Musk's increasing political involvement. Once a dominant force in the electric vehicle (EV) market, Tesla's share has dramatically decreased from nearly 80% five years ago to facing declining consumer interest.

Becky Peterson, the Journal’s Tesla correspondent, elaborates on the brand’s transformation:

"People are more embarrassed to own Teslas. There's bumper stickers, people saying they bought their Teslas before Elon went crazy... that's changing the brand perception dramatically." (07:14)

Survey Insights and Sales Trends

A 2022 survey by Strategic Vision indicated that 22% of car shoppers would consider a Tesla for their next purchase, aligning Tesla with luxury brands like Mercedes and BMW. However, by last summer, this number plummeted to 7%, comparable to brands like Lincoln and Dodge. Recent surveys show no signs of recovery, with 63% of respondents in December stating they would not consider buying a Tesla—a 10% increase from the previous spring.

In terms of sales, official numbers for the first quarter are pending, but estimates from Ward's Intelligence suggest a 2% drop in US sales compared to the previous year. Internationally, the decline is more pronounced:

• Germany: Sales fell by 76% in February.
• France: Sales decreased by 26%.
• China: Deliveries dropped by 49% compared to February of the previous year.

This drop is attributed to increased domestic competition and diminishing consumer interest.

Elon Musk’s Vision for Tesla’s Future

Despite current challenges, Elon Musk remains optimistic about Tesla's pivot towards becoming an AI and robotics company. He believes that the EV segment may be in distress, but the future lies in advanced self-driving software and software-driven innovations. However, this vision is risky, as Tesla's AI and robotics ambitions are currently funded by its EV sales. A stagnation in car sales could jeopardize these future projects.

Potential Repositioning Efforts

There is speculation about Tesla attempting to reposition its brand to attract a different demographic, possibly appealing to more conservative buyers. However, evidence of significant shifts in this direction remains inconclusive, with only some city-specific data indicating varying sales trends based on political leanings.

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5. Additional Challenges: SpaceX and Vaccine Oversight

SpaceX’s Starship Explosion

Another hurdle for Elon Musk’s ventures comes from SpaceX, which recently lost another Starship spacecraft during a test rocket launch. The explosion over the Caribbean has prompted flight diversions and mirrors a similar incident in January. The FAA has mandated an investigation into the cause, while SpaceX continues to coordinate with safety officials.

Robert F. Kennedy Jr.'s Role in Vaccine Oversight

The podcast also covers Robert F. Kennedy Jr.'s initiatives as the new Health Secretary, focusing on the federal oversight of vaccines. Under Kennedy’s leadership, the Department of Health and Human Services (HHS) has canceled or postponed meetings between infectious disease experts and is scrutinizing vaccine contracts.

Dominique Mossbergen, a reporter for the Journal, provides perspective on Kennedy’s actions:

"His supporters say that Kennedy is really focused on increasing transparency at HHS... However, critics worry that his stance on vaccines could increase vaccine hesitancy and skepticism." (11:54)

Kennedy has stated he is not anti-vaccine and intends to focus on chronic illnesses. Nonetheless, his early actions indicate a potentially contentious path ahead in vaccine policy, requiring careful navigation to balance transparency with public health efficacy.

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Conclusion

This episode of WSJ's "What's News" delves into a diverse array of topics, from geopolitical tensions and significant business buyouts to the fluctuating dynamics of the cryptocurrency and automotive industries. The spotlight on Elon Musk reveals a complex interplay between personal political actions and corporate performance, highlighting the delicate balance between leadership persona and brand identity. Additionally, emerging challenges in aerospace and public health underscore the multifaceted nature of today's business and political landscapes.

Notable Quotes:

• Steve Witkoff on potential US-Israel action against Hamas:

  "What's going to happen? I think there's going to be some action taken jointly with the Israelis..." (01:26)

• Becky Peterson on Tesla's changing brand perception:

  "People are more embarrassed to own Teslas... that's changing the brand perception dramatically." (07:14)

• Dominique Mossbergen on Robert F. Kennedy Jr.'s vaccine policies:

  "His supporters agree with a lot of these moves... critics worry that his stance on vaccines is going to increase vaccine hesitancy." (11:54)

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Produced by: Kate Bullivant and Daniel Bach
Supervising Producer: Christina Rocca
Host: Luke Vargas

For more in-depth reporting and behind-the-scenes insights, subscribers can access additional content through the links provided in the podcast's show notes.

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Timestamps Reference:

• 01:26
• 02:10
• 03:40
• 07:14
• 11:54

Transcript

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[Luke Vargas]

The US threatens joint action with Israel against Hamas unless the group releases all hot hostages from Gaza. Plus, Walgreens gets a fresh chance to fix its business with new owners and away from the public eye and Tesla's fortunes fall as Elon Musk rises in.

[Becky Peterson]

Trump's world We're saying people are more embarrassed to own Teslas. There's bumper stickers, people saying they bought their Teslas before Elon went crazy. There's protesters outside of the store, and that's changing the brand perception dramatically.

[Luke Vargas]

It's Friday, March 7th. I'm Luke Vargas for the Wall Street Journal, and Here is the a.m. ed of what's news, the top headlines and business stories moving your world today. Nearly a week since the expiration of an Israel Hamas ceasefire, President Trump's Middle east envoy is floating the threat of joint US Israeli action against Hamas if it doesn't release all hostages from Gaza. Here was Steve Witkoff outside the White House.

[Steve Witkoff]

What's going to happen? I think there's going to be some action take could be jointly with the Israelis. It's unfair right now, but I think Hamas has an opportunity to act reasonably, to do what's right, and then to walk out. They're not going to be a part of a government there.

[Luke Vargas]

Witkoff said he hoped the situation could still be resolved diplomatically. And the Trump administration confirmed this week it had engaged in direct talks with Hamas, its first publicly acknowledged discussions with the group since the start of the war in October 2023. But as Journal correspondent Dov Lieber told me, Gaza negotiations are increasingly taking place outside of the ceasefire framework agreed to in the waning days of the Biden administration.

[Dov Lieber]

Israel is hoping the US can help it force Hamas to release more hostages at this current stage without agreeing to any kind of ceasefire or without making any kind of strategic retreats from the Gaza Strip. Israel still controlling this border between Gaza and Egypt. That allows Israel to keep a full control of things going in and out of Gaza. And what we're seeing right now is a considered effort by Israel and the United States to force Hamas to release more hostages without Israel and Hamas having to negotiate what is a seemingly unbridgeable issue for them, which is how this war will end.

[Luke Vargas]

Meanwhile, top American officials are prepared to meet their Ukrainian counterparts next week in Saudi Arabia to set the stage for potential peace talks with Russia. The meeting, which could signal a healing of relations between Kyiv and Washington, comes as the Trump administration believes Ukrainian President Volodymyr Zelensky has apologized following last week's contentious Oval Office meeting with President Trump and signaled he wants to work towards peace. Walgreens is going private the embattled drugstore chain agreed yesterday to a buyout deal with Sycamore partners valued at $10 billion, less than a tenth of what the company was worth a decade ago. It's an agreement that Journal pharmaceutical reporter Joseph Walker says will allow Walgreens new owners to try and fix the struggling business out of the public eye.

[Joseph Walker]

A lot remains to be seen as to exactly how Sycamore will go about this. Some of the plans already underway to shrink the Walgreens footprint across the US Will continue. The company has said that it plans to close about 1200 stores over the next few years. We also expect to see the company's different divisions split up. So maybe the pharmacy business will be split up from the pharmacy and wholesaling business in Europe and perhaps as well the Boots pharmacy in the uk uk which is a favorite of our friends across the pond.

[Luke Vargas]

Walgreens shares are up in off hours trading, closing in on the $11.45 share price that Sycamore agreed to pay. And in other market news today, Chinese exports over the first two months of the year have come in weaker than expected amid rising trade tensions with the U.S. according to official data, exports grew 2.3% compared with the same period a year earlier, falling short of the 4.5% economists polled by the Journal had forec. The crypto world is reacting to President Trump's executive order yesterday establishing a strategic Bitcoin reserve. Comments from Trump last weekend that four other digital currencies would join bitcoin in the reserve had sparked frenzy in crypto markets. However, the final order clarified that new purchases would only be made for bitcoin, while other cryptocurrencies likely to include Ether, xrp, Solana and Cardano, would be held in a stockpile comprised of assets seized by law enforcement. The White House is due to hold first ever crypto summit today. And also on deck, the Labor Department is due to release its February jobs report at 8:30am Eastern. And we'll hear from Fed Chair Jerome Powell at 12:30pm his last public remarks before the Fed makes its next rate decision. Coming up, Elon Musk's alliance with Donald Trump weighs on Tesla. Plus, Robert F. Kennedy Jr. Introduces greater scrutiny of vaccines as health secretary. Those stories and more after the break.

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[Luke Vargas]

Five years ago, Tesla's share of the EV market was close to 80%. Two years ago, its stock was one of the hottest things on Wall street. And as recently as December, its market value hit $1.5 trillion. But in the months since, the narrative has flipped. As the politics of CEO Elon Musk rapidly reorient market perceptions of Tesla, its rooms, charging stations and factories abroad and in the US Become the targets of protests and vandalism. And most importantly for the company's bottom line, buyers may be walking away. Journal reporter Becky Peterson covers Tesla and joins me now from New York. Becky, have I captured the change in Tesla's fortunes sufficiently there? This has been a pretty rapid shift, and notably one that has seen Elon Musk go from being really a positive association for many EV buyers to now possibly a drag on the brand.

[Becky Peterson]

Yeah, in the past, Tesla had a great reputation in California. They're everywhere. Even still, just because of pushes to increase the number of EV drivers, they were associated with environmentalism and sort of like an optimism for how tech could help save the planet. And Elon, too, was associated with those things. Now that that's shifted, we're saying people are more embarrassed to own Teslas. There's bumper stickers, people saying they bought their Teslas before Elon went crazy. There's protesters outside of the store, and that's changing the brand perception dramatically.

[Luke Vargas]

How are we measuring that?

[Becky Peterson]

So one survey by the firm strategic vision in 2022, before Elon acquired Twitter, 22% of car shoppers that were surveyed said they would definitely consider a Tesla for their next vehicle purchase. So that put Tesla on par with other luxury brands like Mercedes and BMW, which have really strong reputation with shoppers. Last summer, that percentage dropped to 7%, which put Tesla more in line with cars like Lincoln and Dodge. And it stayed there since we spoke with Alexander Edwards, who's the head of Strategic Vision, and he said there's no signs of recovery for Tesla's brand. In December, 63% of those surveyed said they wouldn't consider buying a Tesla, which is about a 10% jump from spring of last year.

[Luke Vargas]

Do we know about actual sales trends changing?

[Becky Peterson]

So we don't yet have official numbers for how Tesla's done in the first quarter of the year, but there are some signs that sales are slipping. Last year sales fell 7% in the US and in the first two months it's looking like they're down 2%, according to estimates from Ward's Intelligence. Elsewhere in the world though, the drop has been much more dramatic. In Germany in February, sales fell 76% and in France they fell 26%. That's according to government and industry data. And then Tesla China, which exports to other countries, their Deliveries are down 49% compared to February of last year. A big part of that is because of increased competition domestically.

[Luke Vargas]

Yeah, I was going to say this is a company that was already facing headwinds from competition. There were some quality concerns. There's been flagging consumer demand for EVs. Right. So add to that changing perceptions of Elon Musk. How serious is this for Tesla? What are their options going forward?

[Becky Peterson]

If you ask Elon, Tesla is on its way to being an AI and robotics company. The EV business may be in distress, but that won't matter once Tesla releases its full self driving software globally and once it becomes more of a software company. But analysts have been saying for years Tesla funds its AI and robotics research on car sales. So it really is a risk to Musk's future ambitions for Tesla if the car business stalls.

[Luke Vargas]

Have you heard anything about a repositioning, some sort of pivot by the company to try to find other buyers who could maybe get those sales numbers back up?

[Becky Peterson]

An idealist would say maybe this opens up the EV market to Republicans or people who would be less likely to buy a car that was popular with Democrats. So far we're not seeing any indicators that Republican support is drumming up sales. One exception to this is there is some city by city data which shows that left leaning metropolitan areas have declining sales while some more red tinged cities have increasing sales. But it's hard to know right now how that corresponds to Musk's actions.

[Luke Vargas]

Journal reporter Becky Peterson covers Tesla for us out of New York. Becky, thank you so much.

[Becky Peterson]

Thank you.

[Luke Vargas]

And adding to the challenges facing Musk's company's SpaceX lost another Starship spacecraft after a test rocket launch yesterday, with the craft blowing up over the Caribbean and prompting flight diversions. Mirroring a similar incident In January, the FAA said it would require SpaceX to conduct an investigation into the explosion's cause, while the company said it was coordinating with safety officials. And finally, Robert F. Kennedy Jr. Has started taking steps to shake up how the federal government oversees vaccines. Under his leadership, the Health and Human Services Department, or hhs, has canceled or postponed meetings between infectious disease experts and is scrutinizing at least two vaccine contracts. And as the Journal's Dominique Mossbergen reports, Kennedy is considering more changes, including at a committee that recommends which vaccines Americans should get and when.

[Dominique Mossbergen]

His supporters agree with a lot of these moves. They say that Kennedy is really focused on increasing transparency at hhs, at removing any hint of conflicts of interest, that he is going to be rigorously looking at data to make these decisions. And they think that he is going to increase the public's trust in government and in HHS specifically. It's too early to say what kind of impacts Kennedy will have on vaccine policy, but some of his critics, including doctors and public health experts and infectious disease experts, they worry that Kennedy's early actions and also his stance on vaccines is going to increase vaccine hesitancy and skepticism just more broadly ahead of his confirmation.

[Luke Vargas]

Kennedy told senators he wasn't anti vaccine and said he would focus on chronic illness. But as our colleagues Liz Eslie White and Christina Peterson report, his first week on the job show, he'll need to chart a careful course to turn his views into policy. Journal subscribers can check out their behind the scenes reporting by clicking on the link in our show notes. And that's it for what's news for this Friday morning. Today's show was produced by Kate Bullivant and Daniel Bach, with supervising producer Christina Rocca. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Otherwise, have a great weekend and thanks for.