Elon Musk is finding out why Warren Buffett steers clear of politics

• Elon Musk's central role in the Trump administration has sparked a fierce backlash against Tesla.
• Warren Buffett stays out of politics as he knows his employees and shareholders could pay the price.
• Musk had good reasons to get political but he's damaging his companies, commentators tell BI.

Elon Musk's foray into politics has put a target on Tesla, showing Warren Buffett was right to worry that speaking out could hurt his employees and shareholders.

Musk threw his money and clout behind President Donald Trump's reelection campaign last year, stumping for the Republican candidate at rallies, whipping up support for him on X, and pouring more than $290 million into returning him to power.

The world's richest man is now a prominent advisor to the US leader and the driving force behind DOGE's ostensible mission to reduce government fraud, waste, and abuse.

Musk's central role in the Trump administration has rankled some Americans, sparking boycotts and sales of Tesla vehicles, protests outside showrooms — and even vandalism and destruction of the company's products and property.

The Tesla and SpaceX CEO has said he's shocked by the violence, calling it "insane and deeply wrong" in an X post earlier this month. "Tesla just makes electric cars and has done nothing to deserve these evil attacks."

In another post, Musk wrote: "Has there ever been such a level of coordinated violence against a peaceful company? I understand not wanting to buy a product, but this is extreme arson and destruction!"

Staying out of trouble

Buffett, the CEO of Berkshire Hathaway, openly supported Democrats until a few years ago. He hosted fundraisers for Barack Obama in 2011, and took the stage at a Hillary Clinton rally in 2016 to call out Trump's multiple failed businesses, refusal to release his tax returns, and cruel treatment of others. He did not endorse Kamala Harris or any other politicians last year.

The billionaire investor explained why at Berkshire's annual shareholders' meeting in 2022. His previous stance was that he doesn't put his "citizenship in a blind trust as a CEO," but recognized that voicing his political views could anger people and prompt them to "take it out on our companies."

"I've decidedly backed off. I don't want to say anything that'll get attributed, basically to Berkshire, and have somebody else bear the consequences of what I talk about," Buffett said, underscoring that he doesn't want his workers and stockholders to "pay the price" for his political commentary.

However, Musk and Buffett have starkly different goals that shape their political strategies, Sean Lux, an associate professor of practice at Texas Tech University's Rawls College of Business, told Business Insider.

The Berkshire chief is focused on delivering consistent, long-term returns regardless of which party is in charge, so avoiding politics or playing nice with both sides makes sense for him, Lux said.

As for Musk, his ultimate mission is to reach Mars and the US government could be a "tremendous catalyst or impediment" to those efforts, Lux said.

"Donald Trump's candidacy provided Elon a once-in-history opportunity to broadly influence US policy in support of his goals," Lux said. "Elon is probably the greatest business strategist of his generation, and he was unlikely to miss this opportunity regardless of public backlash."

The business guru pointed to the Federal Communications Commission's recent decision to allow SpaceX's Starlink unit to offer direct-to-cell satellite service.

Lux said that "alone was worth the cost of Elon's support to Trump's campaign." It's a major step toward Musk disrupting not just telecom giants but players such as Apple, Meta, and Alphabet.

Speaking out can be costly

Steven Callander, a professor of political economy at Stanford Graduate School of Business, told BI the backlash against Musk for his politics actions was "inevitable." He said the "real cost to Tesla will be the lost sales and the brand damage" — not the vandalism.

New Tesla registrations in the US tumbled 11% in January — even as Ford's EV sales soared 54% — and picture was worse in Europe as sales plunged more than 40% in February, industry reports show. Tesla shares are down 45% from their December high.

Callander said the public is fine with CEOs taking political stances as that's "part of being authentic," but the risk is they become so enmeshed in politics that it "overwhelms their business identity."

"This is Musk's fate," he said, adding that the benefits to Musk's companies from government contracts "will be swamped by the damage he is doing with the millions of customers in the general public."

Callander added that business leaders don't only have to gauge the risk of public backlash, but now the possibility of government retaliation too. That's a "real concern for many CEOs," he said. "They'd rather stay in the pack and not be the one targeted by Trump."