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
Chapter 1: What are the current geopolitical tensions involving the U.S., Israel, and Hamas?
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 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.
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 Witkoff outside the White House.
I think there's going to be some action taken. It could be jointly with the Israelis. It's unclear 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 this 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 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.
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Chapter 2: How is Elon Musk's political stance affecting Tesla's brand?
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. 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 U.S., 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.
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