Did Elon Musk’s ‘Salute’ Cripple The Tesla Robotaxi?

The world has been abuzz over the salute done by Elon Musk at the inauguration. Was it a Nazi salute? Was it deliberate or inadvertent? Real or misinterpreted? A troll? Musk has said little that’s concrete. In the end though, when it comes to his brand—which is all about image—it doesn’t matter what he meant, only what people think it means. Making no comment on his actual intent, we might consider the consequences of many customers interpreting an ill intent to the gesture. There’s been much coverage if it will affect the sales of Teslas, extended from the debate about how much his close affiliation with Donald Trump might affect that. But a longer term question is how much it will hurt the success of Tesla’s hoped-for robotaxi (or CyberCab) business.

Musk has stated many times that AI & automation—FSD, the robotaxi and the Optimus robot—are the true future of Tesla, and the main thing that justifies its astronomical stock price. He’s not wrong, as that valuation, dwarfing all other automakers, is hard to justify for “just” a wildly successful EV brand.

Musk’s political moves will drive some buyers to not buy his products. Just how many is unknown, but political boycotts of products rarely are strong enough to kill an established company. Even a loss of 30% would not do it, and that’s not likely. Teslas are more popular in California, and among more liberal buyers, so the risk is stonger, but those buyers might easily be replaced with conservatives who identify with Musk.

Robotaxis are Urban

The robotaxi, however, is not a product, it’s a service. In particular it’s an urban service. We won’t see robotaxis in small towns and rural areas for quite some time. The economics don’t work as well, and it’s much harder to offer short pick-up wait times in less populated places. While people anywhere might buy a Tesla, only big city urban dwellers will call robotaxis, and only they will take the real step needed for robotaxi success, namely to give up ownership of a car and switch in a big way to robotaxi service.

Large urban areas, however, swing quite heavily one way on the political spectrum. If Tesla, fairly or unfairly, gets a Nazi taint among that population, that creates a big barrier in competing with other services unless it’s vastly superior in service or price. Much more than even association with MAGA would do. It took Volkswagen many decades to overcome its Nazi associations, and of course it first had to utterly renounce them. Henry Ford, on the other hand, sold many cars, in spite of associations with anti-semitism. For now, Musk has decided to brush them off as not serious. He’s not been the type to renounce his mistakes.

Of course, first Tesla must make a working Robotaxi. They aren’t close to that yet, and what little public data we have suggests the system needs to improve 5,000-fold to match Waymo, the leader in the space. (Waymo recently had the independent insurance company SwissRe publish that they had one insurance liability claim for every 2.3 million miles of fully autonomous driving. While Tesla does not do autonomous driving yet, and hasn’t measured “claims,” Tesla owners are reporting needing a “critical intervention”—which could lead to such a claim—about every 400 miles.) 2.3 million is somewhat larger than 400.

ForbesTesla Offers Little Information On Robotaxi, Here’s The Deeper ScoopBy Brad Templeton

This means, however, that the Tesla Robotaxi is still several years away, and probably won’t deploy at any scale until after the Trump 2nd term. As such, this brand crisis may well have settled by that time.

Tesla sits at a point of great risk. If public impression among the liberal-leaning urban dwellers seeking to replace cars gets, correctly or not, even a slight whiff of Nazism that persists, people will not want to ride in, or be seen to ride in a vehicle with such a taint. Tesla should move to quell this risk. Even a strong MAGA association presents risks, though not as great. This makes Musk’s refusal to quash the story more puzzling, though he has always wanted to never alter what he says based on political impressions or what others think. What he wants for his own sense of integrity and for the good of his company may be at odds.

A ride is a small purchase, while a car is a large one. People may be more willing to put aside their politics to get what is truly the car they think is best, and Tesla’s have many fans who think it’s the best. For a 15 minute ride, politics may affect purchase more, and if there’s a Waymo, or Zoox, or May, or Motional available, people might readily switch to those if the offering is similar. Picking an inferior car for the next five years to suit your political tastes is probably a harder thing than missing out on the best for 15 minutes. It’s also less likely to affect the choices of those who buy rocket launches, home batteries, tunnels or brain implants, particularly if those buyers are the Trump administration. But if this is the core of Tesla’s value, it’s a question to watch into the future.