2 weeks Ago
Elon Musk's partnership with Donald Trump has greatly boosted Tesla stock Elon Musk is well poised with the election of Donald Trump, both because he spent over $100M to assist Trump and cement a friendship and because he is the proposed head for a “Department of Government Efficiency” in the Trump administration. After the election, Tesla stock has gained $18%, raising Musk’s net worth by over $30B and almost surely raising the value of his SpaceX holdings as well. It’s a major win, but it comes with some risks and downsides as well, due to the demographic Musk expects to ride his robotaxis.
Musk’s “bet” on Trump may not have been a gamble. As owner of Twitter/X and a massive compute farm, Musk is one of the few who had complete access to a massive database of a decade of social media activities of over 100 million US residents. With orders of magnitude more (and better) data than pollsters, he had the ability to know the election result months in advance, and claimed as much (without admitting to special data analysis) on X, stating “ This trend was obvious on X for months .
” It is likely Tesla need now have minimal fear of the U.S. government.
It is currently subject to multiple safety investigations by the Dept. of Transportation’s NHTSA division, which may change under a new secretary of Transportation. Indeed any government agency is likely to be very careful with a person who can slash their budget in half.
This presents a significant conflict of interest, but there have been so far few indications such conflicts will be mitigated. Musk has frequently stated that Tesla will deliver “full self driving” very soon, and that the only uncertainty over deployment is government regulation. That uncertainty is now greatly reduced.
(The technology though, is still far from ready.) Tesla makes use of the various EV subsidies it is entitled to, but Musk has, unlike other EV vendors, been willing to work in a world without these subsidies. Tesla grew greatly while the $7,5000 EV tax credit ran out for Teslas while most other carmakers could take advantage of it.
If this credit is removed, it would increase the price of Teslas but do more harm to Tesla’s competitors. Musk might also advocate for less evenly applied regulatory capture. Celebrities React To Trump Win: Roseanne Barr Says She’d Work For Trump, Billie Eilish Says He ‘Hates Women’ FBI Warns Gmail, Outlook Users Of $100 Government Emergency Data Email Hack New Chrome, Safari, Edge, Firefox Warning—Do Not Use These Websites Tesla built its EV charging network largely without subsidies, while almost all other chargers were built with massive subsidies.
Even so, Tesla’s network was not only built for far less money, it’s also widely acclaimed as the best, and not by a small margin. The new $5B NEVI subsidy plan was going to eventually also subsidize Tesla, in part because the superiority of their systems helped Tesla’s NACS charging plug win the plug wars, but Musk might be happy to be rid of it, and many other credits in the Inflation Reduction Act. SpaceX receives almost half its revenue from U.
S. government sources, primarily NASA. SpaceX wins contracts by being the best, but it could become more difficult to compete with them when the CEO is the director of government efficiency and special advisor to the President.
Blue Origin has sued (and lost) over what it argues was unfair competition by SpaceX already. Musk’s all-in on political engagement this season does present some risk for the CEO of a consumer business like Tesla. With one of the most polarized political battles in U.
S. history, Musk’s actions made both friends and enemies for Tesla, both among the powerful and the general public. What does that mean for Tesla’s business? It’s rare for business leaders to become so political, precisely because of the polarization.
It may attract some customers but can lose others. Trump himself has seen both new business from his political followers and lost business from his opponents. Silvio Berlusconi found good synergy between his TV networks and political career.
Mitt Romney’s Bain Capital didn’t seem much affected, nor was Ross Perot’s EDS, though they were not involved with such deep polarization. While Musk’s politics have cost Tesla some sales, it is as yet unclear if this is significant. About 25% of U.
S. adults voted for Harris, but it’s not clear what fraction of those would boycott Tesla cars. The loss of Twitter advertisers over the CEO’s politics and policies was much clearer.
If as many as 10% of the Harris voters engaged in a boycott, that would still only be 2.5% of the population, a loss of sales well compensated by the benefits listed above. On the other hand, Tesla sales are much stronger in “blue” areas than “red” though Musk has said he just wants EV sales to increase for everybody.
Trump has hinted at opposition to EVs and the fight against climate change but his new advisor will bend him away from that. Tesla faces an unusual issue. Musk believes the future of the company is in automation and their planned robotaxi service.
Robotaxi service, however, is overwhelmingly urban, but the divide over Trump is very much an urban vs. rural one, and in the wrong direction for Musk. If anti-Trump voters become anti-Tesla, they are the urban dwellers who will be the customers.
The effect could be different for a robotaxi service, at last in a city with competition between a Tesla service and a politically more neutral one. A car is a big decision. Buyers are wary of deliberately choosing a vehicle they don’t like over politics.
Switching robotaxis (if there is competition) requires very minor effort. Even so, dislike of Uber’s tactics by left-leaning customers didn’t seem to dent it much. The Swing The G.
O.P. was ascendant in 2024.
The history of U.S. politics is one of swings.
Indeed, when it’s close, the President’s party normally loses over 30 house seats and 3 senators in the first midterm election, which would flip both bodies to the Democrats in 2026. Only 3 midterms in modern history have been an exception. This could create risk for Musk’s intense entry into politics.
He’s made enemies, and those enemies are out of power but will be back soon. What gains he makes may be reversed or blocked, particularly when the flip goes completely the other way, as it will, in time. While it is not that likely that Musk’s $100M GOTV effort flipped this election, considering its large margin, Musk pushed a perception with his million dollar prizes and more that he was working to do just that.
If he wants to escape the eventual backlash, he may need to move to another planet. Oh, wait..
..
