Is Elon Musk’s takeover of Twitter taking the shine off Tesla and his own image too?

Let’s look at the state of Musk’s business interests.

Twitter is now a privately owned company. But it seems to be falling apart in public.

When he took control, Musk laid off staff without understanding who did what; a scramble to rehire key personnel ensued. The staff that remain are reportedly learning of policy and product updates via tweets from Musk and his kitchen cabinet. Engineers have been fired for explaining why Musk’s engagement rate is dwindling. There have been outages and issues for users trying to send tweets. There are troubles brewing in relation to hate speech laws and other rules in the EU. Musk even gave a signal that money was so tight he auctioned off a load of furniture, coffee machines and other items from the San Francisco HQ that he may no longer be paying rent on.

But most of the above amounts to corporate gossip. Where it really matters is financially. Twitter’s year on year revenue is down 40pc. Its top 500 advertisers have walked away. Plans for subscription service have been met with apathy from users. Fewer than 300,000 users have signed up for Twitter Blue. This subscription revenue is less than 3pc of what Musk owes each year in interest. The world’s former richest man had borrowed $12.5bn (€11.7bn) to buy Twitter.

Let’s look at Tesla. It’s a publicly owned company that has outperformed the electric vehicle market — hell, you could say it’s made the market. But Tesla’s market share is now shrinking as other car brands play catch up. Tesla’s stock price dropped by 65pc in 2022 as demand weakened. The company missed its growth targets last year and scaled back production in China. Discounts offered in December spooked investors even more and stock dwindled again.

However, the stock recovered about 20pc of its value at the start of this year. There’s a new cyber truck on the way. The company has teased about an investor event on March 1, where production line technology, long-term expansion plans, capital allocation will all feature. Nothing beats having a vision and showing it off.

And that’s where the differences really appear between Musk’s Twitter and Musk’s Tesla.​

Musk’s genius is in creating a vision; spinning a corporate narrative. Tesla’s corporate narrative to date has been a challenger brand that takes on the gas-guzzling giants. Buying a Tesla used to mean sticking it to the man, showing you stood out from the herd and saving the planet at the same time. It was a classic challenger brand.

Challenger brands are not market leaders. They’re outsiders. Their ambition outstrips their resources. They take on the big guys by thinking outside the box. Tesla successfully tapped into the same brand energy Apple captured in its ‘Think Different’ heyday. And even after it was worth more than all other car brands combined, Tesla could still behave like a challenger because it had a mission that drivers could get behind.

But Twitter is different. Musk has been unable to formulate and communicate a clear corporate narrative. At first there were some incoherent lines around freedom of speech, wedded with philosophical web3 wordplay: Twitter was a decentralised network that would break the hegemony of old media and give all a voice. But any such narrative has been drowned out by the chaos from within Twitter.

Musk failed to understand what Twitter means to its users, perhaps blinded by what it means to him. Tesla makes vehicles; these have wheels and batteries and engines. They can be branded and marketed — and it’s the same product for anyone who drives it. Twitter, on the other hand is different. The technical product — the software — isn’t actually the product. It’s only the glue. The real product is the network, and everyone’s network is different. The act of annunciating a billionaire’s vision for Twitter alienates users immediately. It’s no surprise how a bull-in-a-china-shop billionaire, lacking in patience and empathy, has alienated a lot of users.

The long-term future of Twitter is probably more reliant on market economics than the vision of its owner. Social media isn’t a great sector to be in. TikTok has stolen all the thunder and the eyeballs. Apple has undermined the advertising business model with its App Tracking. Plus Twitter is seen as a toxic cesspit responsible for insurrection, mental-health issues in teenagers, undermining of democracy and spreading misinformation. It was a great space to be in in 2011, but now it’s a tough place to grow users and revenues.

Tesla too is dependent on market economics. And I expect some of Musk’s Twitter travails to remove some of the virtuous halo from the Tesla brand, but Tesla will struggle to retain market share, regardless of what Musk does. Why? Because Tesla is like Netflix before other streamers got their act together. It had the electric vehicle market to itself, as gas guzzlers were unwilling to disrupt their own businesses. So it built a huge head start. But now the other players are catching up.

So the brand that’s really going to take a kicking here is Elon’s personal brand. He’s gone from a CEO who can do no wrong to a CEO that sometimes seems to be spinning out of control. Sure, some fan boys will still see him as a cross between Jesus and Tony Stark. Others will see him as the tech sector’s Donald Trump: thin-skinned, egotistical and divorced from reality. Most people probably won’t care — but they may be entertained by the corporate shenanigans coming from within Twitter’s HQ.