Wolff: Buffett, Musk square off over cars

Among the large disruptions about to potentially undermine vast parts of the global economy, as well as the everyday behavior on which so many economic assumptions are based — and, too, a wide range of heretofore comfortable businesses — is what’s being called the mobility revolution.

In this, the very nature of automobiles, that international economic bedrock, and how they are used and owned, changes. One part of this revolution is symbolized by Uber, another by self-driving cars. And both are under determined attack. Last week, the idea of self-driving cars in particular — because someone was killed in a Tesla driving on autopilot — became a cautionary modern bête noire.

A self-driving car is one of those fantastic and creepy notions that serves easily as shorthand for the upending of certitude (i.e. cars don’t drive themselves) and for the too-furious pace of technological change. Equally, Tesla, status symbol of the rich and cool, and its founder, Elon Musk, have become shorthand for tech arrogance and financial legerdemain that, after 20 years or so of a free ride, are now taking some serious blowback.

The first point to make: This isn’t a debate about safety. Self-driving cars, by some estimates five years away from coming to market, by other estimates double that, have really no other selling feature than consumer confidence. That’s the product. If they are not safer than drive-it-yourself cars, what’s the point? They fix no problem in a driving-loving culture.

The second is that while this might be an opportunity to debate the nature of the future and the speed of change, and the moment for the zeitgeist (if not the autopilot) to put the brakes on speculative markets and ill-considered innovations (arguably part of what Trump voters are saying), it’s probably not that, either.

Indeed, the sudden shocked-shocked reaction of the media is not a real debate at all. Rather, it’s more clearly a struggle between competitive industrial forces, even, as Musk, has suggested in his tweets, a lowdown, underhanded, empire-strikes-back, range war sort of struggle.

A curious conclusion, or bitter aftertaste, in various C-suites in disrupted industries is that, over the last generation, established businesses too readily threw in the towel, letting tech propaganda raise vast sums to compete with traditional business which, in the current accounting, destroyed more value than it created. (Another part of the populist case.)

In a counter-revolution, or at least a counter-propaganda campaign, you might not hope to find a better case for the prosecution than Musk and Tesla. Musk has raised vast sums on “vision” and personal charisma and what many would argue is a fantasy-world business plan. And yet, if he continues to raise such sums, while his fantasy may yet struggle to be realized, he could disrupt the auto industry enough to give himself an ultimate competitive advantage— pretty much the general tech recipe for success.

Enter Warren Buffett, no small defender of traditional industries, and no small propagandist, either.

Buffett and Musk are currently head-to-head competitors, with Buffett very much representing the old business model and Musk the disruptive new ones — Buffett’s being successful and Musk’s speculative. In 2014, Buffett bought Phoenix-based Van Tuyl Group, the fifth-largest American auto dealer, selling $8 billion in cars a year. The dealer middleman is a significant piece of the business model Tesla is seeking to undermine. In Nevada, Buffett owns NV Energy, the state’s old line utility, which is locked in a battle with Musk’s SolarCity, trying to retail renewable energy — partly at NV Energy’s expense — which, in a bit of financial sleight of hand, Musk is now trying to merge with Tesla.

Buffett, it would appear, is seizing upon the autopilot death to open a concerted anti-Musk, and perhaps by extension, anti-disruption propaganda front. The 85-year-old Buffett has long been a favorite of 87-year-old Fortune magazine — itself in near extremis because of technological disruption — which employed, until her retirement two years ago, the now 87-year-old Carol Loomis, Buffett’s biographer and leading explainer and defender. Indeed, Buffett’s competitive talents, in addition to financial, have always involved an astute handling of the press.

Loomis last week returned from retirement to accuse Musk of withholding material information from his shareholders by failing to immediately report the autopilot death (“Yes, it was material to you — BS article increased your advertising revenue. Just wasn't material to TSLA, as shown by the market,” tweeted Musk). What’s more, Fortune’s editor, Alan Murray, offered a breakthrough thesis that few business publications have been willing to pursue about tech genius-entrepreneurs: “There is a sense that Musk, like many in Silicon Valley, believes he can play by different rules.”

Musk tweeted a suggestion that the Loomis article was “sponsored,” and, though without saying it, broadly suggesting the sponsor was clearly Buffett. (He also seemed to finger the oil-rich Koch brothers, who did sponsor an anti-electric car PR campaign.)

And, indeed, it would be exceedingly hard to imagine that Loomis, much of whose career has been as a Buffett whisperer if not mouthpiece, was not in close touch with her patron on this issue. In an email, Loomis said she had no comment about the Musk story other than to emphasize that she has always disclosed that she is "a longtime friend of Warren's, the editor of his annual letter and a Berkshire Hathaway shareholder."

The curious irony is that, for nearly a generation now, it is the tech side that was confident it could dictate its claims to journalists and undermine the competition with their help (Fortune long being a frequent, and inveterate, tech booster). Musk himself is, well, Musk, in part because of a free press ride.

The vast restructuring and certain dislocations, as well as obvious opportunities, of a revolutionized transportation system — as profound a social makeover as the digital transformation — deserve a far more cautionary press then the digital era ever got. Perhaps that’s starting now. Or perhaps it’s just an example of what makes Buffett Buffett.