WSJ What’s News - Musk’s Politics Dent Tesla’s Appeal

Episode Date: March 7, 2025

A.M. Edition for Mar. 7. The WSJ’s Becky Peterson reports the CEO’s alliance with Donald Trump is putting off some core buyers of electric vehicles. Plus, the U.S. threatens joint action with Israel against Hamas unless the group releases all hostages from Gaza. And Walgreens goes from $100 billion health giant to private-equity salvage project after striking a buyout deal. Luke Vargas hosts. Read Liz Essley Whyte and Kristina Peterson's behind-the-scenes look at RFK Jr.s first weeks as health secretary. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Carry the Fire. I'm your host, Lisa Laflamme. Carry the Fire, a podcast by the Princess Margaret Cancer Foundation featuring inspiring personal stories about what happens when world leading doctors, nurses, researchers, and their patients come together to ignite breakthroughs. Carry the Fire launches Monday, January 27th, wherever you get your podcasts. The U.S. threatens joint action with Israel against Hamas unless the group releases all 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 Trump's world. We're saying people are more embarrassed to own Teslas. There's bumper stickers. People say they bought their Teslas before Elon went crazy. There's protesters outside of the store and that's changing the brand perception dramatically.

It's Friday, March 7th. I'm Luke Vargas for the Wall Street Journal and here is the AM edition 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 U.S.-Israeli action against Hamas if it doesn't release all hostages from Gaza. Here was Steve Wyckoff outside the White House. … what's going to happen.

I think there's going to be some action taken. It could be jointly with the Israelis. It's out of fear 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. 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-related negotiations are increasingly taking place outside of the ceasefire framework agreed to in the waning days of the Biden administration. Israel is hoping the U.S. can help it force Hamas to release more hostages at its current stage without agreeing to any kind of ceasefire or without making any kind of strategic retreats from the Gaza Strip. Israel is still controlling this border between Gaza and Egypt that allows Israel to keep

it 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. 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 Kiev and Washington, comes as the Trump administration believes Ukrainian President Vladimir 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 pharmaceuticals reporter Joseph Walker says will allow Walgreens new owners to try and fix the struggling business out of the public eye. 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 U.S. will

continue. The company has said that it plans to close about 1,200 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, which is a favorite of our friends across the pond. 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 percent compared with the same period a year earlier, falling short of the 4.5 percent economists pulled by the journal had forecast. 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 a first-ever Crypto Summit today. And also on deck, the Labor Department is due to release its February jobs report at 8.30 a.m. Eastern, and we'll hear from Fed Chair Jerome Powell at 12.30 p.m., 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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same language you do. Business. So join the more than 400,000 Canadian entrepreneurs who already count on us and contact Desjardins the EV market was close to 80 percent. 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 showrooms, charging stations, and factories abroad and in the U.S. 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 fortune 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. 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 seeing 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. How are we measuring that? 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.

Do we know about actual sales trends changing? 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 Wards 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. 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?

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. Soterios Johnson 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? Amy Quinton 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. Journal reporter Becky Peterson covers Tesla for us out of New York. Becky, thank you so much.

Thank you. And adding to the challenges facing Musk's companies, 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. 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 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, Kennedy told senators he wasn't anti-vaccine and said he would focus on chronic illness. But as our colleagues Liz Esley-White and Christina Peterson report, his first weeks 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 Bulevent 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. Thanks for listening.