The new problems facing Elon Musk, X and Tesla in 2024

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Hello, and welcome back to i‘s science and tech newsletter. Over the coming weeks there will be a series of guest newsletters that will try and untangle big issues affecting the twinned worlds of science and technology – and this is the first. I’m Chris Stokel-Walker, a freelance journalist and regular contributor to i. And this week, we’re gazing into Elon Musk’s crystal ball.

The enigmatic entrepreneur is an oversized figure in the worlds of tech and science, helping propel forward space exploration with his startup SpaceX while singlehandedly proving the existence of gravity by sending the social media company he bought for $44bn in October 2022 – X, formerly Twitter – crashing down to Earth.

The value of X has dropped faster than a failed rocket launch since Musk took over the platform and cast it in his own image – and his fixation on trying to redraw the rules of what he once called the “de facto public town square” could start to affect his other enterprises.

So what pitfalls does Musk have to avoid in the coming year? Here are five issues that should be at the top of his in-tray.

1. X running out of money

When Musk bought Twitter in October 2022, he didn’t stump up much of his own cash – banks and other investors helped. One of those companies that now holds a stake in the renamed X platform, the Fidelity mutual fund, said recently that it had slashed the value of its share in the firm by 71.5 per cent since the purchase.

The data, which runs up to the end of November 2023, includes a more than 10 per cent cut in the value of the holding that month alone, which was marked by Musk telling advertisers that were questioning the direction of the platform to “go f**k yourself”.

Such a startling decrease in value does open up the possibility that those who helped bankroll Musk’s acquisition call in their loans or cut their losses. The platform could run out of cash, as well as steam.

“Elon Musk has two basic challenges at X,” says Melissa Ingle, a former senior data scientist at Twitter who was laid off by Musk early in his tenure. “Advertisers and users, both of whom are leaving the site.”

2. The EU breathing down Musk’s neck

As you might have guessed from his recent comment towards advertisers, Musk isn’t exactly in the business of people-pleasing. But he’s managed to raise the hackles of even the most even-handed arbitrators of what’s right and wrong: European regulators.

“X is target number one, it’s in the crosshairs, and they’re just desperate to pull the trigger,” says social media expert Matt Navarra.

A week before Christmas, the European Commission announced it was opening formal proceedings against X to ascertain whether it had broken the bloc’s new Digital Services Act (DSA), which requires it to tamp down on illegal content, to stop mis- and disinformation, and to be transparent in how it presents information to users.

Ironically, the team that had previously helped tackle mis- and disinformation was Ingle’s, which was one of the first to be excised by Musk after he took over the company.

“We used to face a sort of natural trolley problem of potentially pulling the switch and derailing legitimate info, which dampened the dissemination of vital information, versus not pulling the switch – harmful info getting out to the community,” she says. “The problem is, now there’s not only no one at the switch, the switch itself has been removed and everything gets out.”

The EU announcement was the worst possible Christmas present for Musk, given it came around the same time that a major, well-funded competitor – Instagram Threads (established by Facebook parent company Meta) – finally opened up to European consumers nearly six months after launching.

If found in breach of the DSA, there’s a real risk that X could be forced to shut down in Europe.

3. Tesla losing the EV war

It can be hard to remember, given how much Musk’s travails at Twitter have dominated the discourse, that he also runs a relatively successful electric vehicle company: Tesla.

Or should that be “runs a once-successful electric vehicle company”? At the end of 2023, Musk learned that for the first time in years, Tesla was not the world’s biggest electric vehicle company. China’s BYD sold 8 per cent more electric vehicles in the final three months of 2023 than Tesla – 526,000, compared to Tesla’s 484,000. It’s worth adding some perspective: across the whole of the year, Tesla still outgunned BYD worldwide. But it indicates a shift in the power balance, with the Chinese company likely to capitalise on momentum to become ever stronger in the world of EVs.

“Elon Musk’s business model is based on getting his vehicles to hyperscale very quickly,” says Ferdinand Dudenhöffer, director of the Centre for Automotive Research in Bochum, Germany. “But to do this he needs a battery electric vehicle market that is growing very dynamically.” It’s currently not.

4. Queries about drugs

Musk started the year with more controversy after the Wall Street Journal reported concerns among employees and executives at his companies that his drug use “could have major consequences not just for his health, but also the six companies and billions in assets he oversees”.

The blockbuster report alleged that Musk has used LSD, cocaine, ecstasy and psychedelic mushrooms at parties where participants are bound by non-disclosure agreements. Those close to Musk who spoke to the newspaper claimed the billionaire’s drug use was “ongoing”.

An attorney for Musk pooh-poohed the report, telling the Wall Street Journal that Musk was regularly drug tested, and “has never failed a test”, while also alleging “false facts” within the report. Musk pooh-poohed it himself – albeit in a style that has become his trademark, by adding a poop emoji to signal his response.

5. Playing to an increasingly small, extreme niche

For the i, I’ve previously covered one of Musk’s most controversial decisions: to let Katie Hopkins and Tommy Robinson back on X.

In the weeks since then, Musk has continued his tack towards the rightthreas wing, playing to the galleries and promoting ever-more extreme content.

“It may well help increase engagement and numbers on X,” says Navarra. “But the engagement that is being created and generated and amplified is from the very extremes of the user base.”

In part, that’s redressing what Musk perceived as a long historical imbalance in favour of left-leaning voices on social media. But in the spirit of Science Fictions, I’d be remiss to not mention that Twitter’s own research showed that far from social media exhibiting a left-wing bias, it’s historically been shown to favour right-wing voices more than any other.

But it comes with risks. If you can stomach the violent videos thrust into your algorithmically-dictated For You timeline, and can avert your eyes from the porn bots that pop up regularly while you browse, you might have noticed that X has become a relatively unwelcoming place unless you hold quite radically extreme views. “I think this is potentially a much bigger issue than his purported drug use,” says Ingle.

Musk appears to have chosen to favour those voices to find an audience but he runs the risk of putting off the average person.

We just need a lifeboat to abandon ship to – which could well be Threads.

This is i’s science newsletter, a subscriber-only newsletter from i. If you’d like to get this direct to your inbox, every single week, you can sign up here.