By endorsing Trump, Elon Musk is playing with Tesla’s future

Inside half-hour of the tried assassination of former President Donald Trump, Elon Musk did what he had beforehand promised to not do. 

“I fully endorse President Trump and hope for his rapid recovery,” the billionaire posted on X. A lot for that vow to remain on the sidelines. 

Nevertheless it didn’t cease there. Days later, The Wall Road Journal reported that Musk deliberate on donating huge sums of his personal wealth to a brilliant PAC supporting Trump, presumably upwards of $45 million a month. (Musk later disputed the report, calling it “FAKE GNUS.”)

Whether or not he plans on flooding the election with money or not, Musk’s MAGA awakening might be fairly befuddling for his fan base. In any case, Musk has staked his legacy on shifting the world to renewable vitality, and Trump is extensively seen as an accelerant for local weather change. 

Trump additionally poses a singular risk to Tesla, which is the supply of most of Musk’s wealth. He has mentioned in no unsure phrases that if elected he would roll again all the Biden administration’s investments in EV charging infrastructure and incentives. And he has made electrical autos an assault line in his marketing campaign, calling them costly, obese, and impractical. 

“I have no objection to the electric vehicle, the EV,” Trump mentioned in a current interview with Bloomberg. “I think it’s great. Elon is fantastic. I think it’s great. I’ve driven them often and they’re wonderful. But you can’t have 100 percent of your cars electric. We can’t electrify our cities.”

And on the Republican Nationwide Conference in Milwaukee, Trump mentioned that he would finish the “EV mandate” on “day one” of his administration. That might additionally embody the brand new car requirements geared toward slashing greenhouse gasoline emissions and spurring extra EV gross sales.

If Trump wins and he succeeds in reversing President Joe Biden’s Inflation Discount Act, the affect could be felt in Tesla’s automobile gross sales. In the present day, anybody searching for a brand new Tesla Mannequin 3 or Mannequin Y will possible have the ability to take as much as $7,500 off the acquisition value on the level of sale, due to Biden’s EV tax credit score. In the meantime, used Teslas qualify for a $4,000 tax credit score. The incentives convey the worth for the brand new rear-wheel-drive Mannequin 3 under $30,000 — even decrease once you apply state credit. 

It’s no secret that Tesla’s gross sales have been lackluster this yr. Rising competitors has compelled the corporate to slash costs, hurting its once-vaunted revenue margins. And Musk’s on-line antics have additional eroded the model’s popularity. Tesla gross sales dropped 6.3 % for the second quarter in 2024, whilst complete EV gross sales climbed 7.3 %, based on Kelley Blue Guide.

Now Musk is risking even additional bleeding by throwing his assist with Trump, who will little doubt do all the pieces in his energy to eradicate EV spending if he’s elected. Home Republicans have already fired a number of photographs throughout the bow, voting for a number of proposals that might roll again the IRA or scrap the EV tax credit score. Trump would fortunately signal any of those payments if given the possibility. 

After all, if Tesla’s tax credit go bye-bye, so would everybody else’s. One may argue that the legacy auto trade depends on the federal government’s largesse greater than Tesla, which has an enormous head begin in EV manufacturing, has a number of factories working across the globe, and has already constructed a dependable community of EV charging stations. With out the credit, the Mannequin 3 would nonetheless possible be one of the inexpensive choices on the market, whereas different automakers’ EVs would instantly change into costlier. And their efforts to introduce extra inexpensive fashions are nonetheless years away from fruition. 

Musk has been a critic of the tax credit prior to now, arguing that the trade ought to stand by itself with authorities handouts. He additionally mentioned that the federal government shouldn’t be funding EV charging stations. “Take away the subsidies,” he mentioned on X earlier this week. “It will only help Tesla.”

However you don’t have to look too far again to see the bounds of this viewpoint. Tesla acquired its begin due to a $475 million mortgage from the Division of Power at a essential time within the firm’s historical past. A number of specialists have famous that Tesla possible wouldn’t have survived, nor was the worldwide powerhouse it’s at the moment, with out the federal mortgage. Musk’s different firms additionally closely depend on authorities contracts, together with SpaceX and its Starlink web enterprise. 

Musk clearly has a cordial relationship with Trump; the 2 apparently chat quite a bit over the cellphone. And regardless of pouring billions of {dollars} into EV growth, the Biden administration has all the time saved Musk and Tesla at arm’s size, snubbing them from White Home occasions and omitting their names from press bulletins. Musk bashed Biden as “not the friendliest” administration again in 2021. 

The Biden administration has additionally taken a sharper take a look at Tesla’s autonomous driving expertise, opening investigations that might doubtlessly lead to prices of securities and wire fraud. Musk might be hoping to nip these probes within the bud by supporting Trump’s bid for the White Home. 

If he succeeds, one can think about some short-term successes for Tesla. The EV tax credit are scrapped, as are any investigation into the corporate’s self-driving claims. Company taxes are minimize, enterprise laws fall by the wayside, and Tesla turns into much less encumbered by allegations of labor abuse or racial and gender discrimination. In the meantime, Musk’s pet causes like immigration crackdowns and gender conformity change into the legislation of the land. 

However there may be a lot extra to lose, together with Tesla’s said aim of accelerating “the world’s transition to sustainable energy,” because it claims on its web site. A Trump victory could be extraordinarily unhealthy for the planet and for the renewable vitality sector. The previous president has lengthy railed towards photo voltaic and wind energy. And the Republican Occasion is a serious ally of the oil and gasoline trade. These aren’t forces that may usher in a cleaner, extra sustainable planet. Fairly the other.

Musk as soon as mentioned that he would by no means become involved in politics and that, when he does, he normally has to carry his nostril. Maybe he ought to have adopted his personal recommendation and stayed out of this race.