Elon Musk's Political Maneuvering: How It Impacts Tesla and the Future of EVs
By Chris Kirkham
(Multibagger) - When Elon Musk endorsed Donald Trump for president last month, the Tesla (NASDAQ: TSLA) founder and CEO backed a candidate who vows to "drill, baby, drill," "end the electric vehicle mandate," and reduce subsidies pivotal to Tesla's success.
Tesla's meteoric rise has been significantly fueled by government loans, tax breaks, and EV-friendly policies. Despite Musk's recent alignment with Trump's Republican rhetoric, Tesla continues to lobby for benefits typically championed by the Democratic Party. In February, Tesla urged the Biden administration to allow California to implement stricter vehicle emissions rules, a stance Trump opposes.
Months earlier, Tesla lobbied for regulations to ban new gasoline cars by 2035, a mandate Trump and other conservatives criticize. This isn't the first time Musk has sent mixed signals on subsidies and politics.
"Elon tends to say he's hostile to subsidies while Tesla is gobbling them up like a hungry Godzilla," said Mike Murphy, a Republican strategist. Musk's pragmatic approach to subsidies—accepting public money when available—reflects his broader ambitions beyond Tesla.
"Tesla is not the endgame for him," said Andrew Ward, a management professor at Lehigh University. Musk’s holdings span artificial intelligence, space exploration, and neuroscience. He might sacrifice Tesla's short-term interests to achieve his long-term goals.
Neither Musk nor Tesla responded to Multibagger' requests for comment. A Trump spokesperson and the White House also declined to comment. The growing bond between Musk and Trump could be spotlighted Monday night when Musk interviews the Republican candidate on X, Musk's social media platform.
Musk's endorsement of Trump solidified in July after a failed assassination attempt against Trump. Musk pledged to fund a political action committee that has spent $21 million supporting Trump and opposing the Democratic ticket. When asked about Trump's views on EVs, Musk responded, "It will be fine."
Tesla’s history shows a reliance on government assistance. Its first major facility in Fremont, California, was developed with a $465 million loan from the U.S. Department of Energy, repaid three years later. More recently, Tesla has earned almost $9 billion since 2018 by selling regulatory credits, awarded for surpassing strict emissions rules, to other automakers.
In February, Tesla lobbied for sustained government support to accelerate the transition away from fossil fuels, mitigating greenhouse gas emissions and protecting public health.
Musk once criticized Trump for dismissing climate change, quitting White House advisory panels in 2017 after Trump withdrew from the Paris Agreement. Initially supportive of Biden's climate agenda, Musk soured when Tesla wasn't invited to a 2021 EV maker gathering. He criticized the Inflation Reduction Act (IRA) but later praised its benefits, acknowledging potential incentives of up to $250 million per quarter for Tesla.
Despite Musk's public criticism of subsidies, Tesla's lobbying tells a different story. In July 2023, Tesla urged the EPA for stricter emissions limits to improve air quality, which also boosts demand for regulatory credits.
Trump opposes stricter emissions rules and EV subsidies, yet Musk's support for him appears driven by broader ambitions. Some shareholders argue this contradicts Musk’s financial interests. Ross Gerber, an investor with a $58 million stake in Tesla, says Musk's support for Trump is contrary to Tesla's clean energy mission.
Former Tesla employees say Musk's stance reflects a balance between ideology and pragmatism. Although Musk opposes government intervention, Tesla would be foolish not to capitalize on available benefits.
Tesla's recent lobbying efforts, advocating for an end to gasoline car production, contradict Trump's stance. Musk’s nuanced view on climate change—downplaying near-term risks but acknowledging long-term accuracy—adds to the complexity.
The dissonance extends beyond environmental views. In May 2022, Tesla promoted its inclusive workplace, highlighting employees from diverse backgrounds. Yet Musk, increasingly critical of identity politics, has distanced himself from Democratic candidates, labeling them the "party of division & hate."
Musk's disdain for Vice President Kamala Harris's bid for the presidency underscores his shifting political allegiances. Harris campaign spokesperson Joseph Costello claims, "Trump is bought and paid for by extremist, anti-worker billionaires, and Elon knows that Trump will give him reckless tax handouts at the expense of the middle class."
Breaking Down the Impact on Your Finances and Life
- Musk's Political Moves: Elon Musk's support for Trump is rooted in broader ambitions beyond Tesla. While this may seem contradictory given Tesla’s reliance on subsidies, it reflects Musk's pragmatic approach to leveraging available benefits.
- Tesla's Growth: Tesla's rapid growth has been significantly aided by government support. Understanding this can help investors gauge the company's future prospects, especially in light of potential changes in political landscapes.
- Regulatory Credits: Tesla's sale of regulatory credits is a crucial revenue stream. Stricter emissions rules increase the value of these credits, which benefits Tesla financially.
- Subsidies and Incentives: Despite Musk’s public criticism, subsidies and incentives like those in the IRA are vital for Tesla’s financial health. EV buyers can also benefit from subsidies, reducing the cost of ownership.
- Climate Policy: Tesla's lobbying for stricter emissions rules aligns with long-term environmental goals, potentially influencing future regulations that could impact the auto industry and the environment.
- Political Landscape: Musk’s shifting political support may influence public perception and policy decisions. Staying informed about these dynamics can help you make educated investment and lifestyle choices.
In summary, Elon Musk's political maneuvers, while seemingly contradictory, are driven by pragmatic and strategic considerations that impact Tesla's growth and the broader EV market. Understanding these dynamics can help you navigate the financial implications for your investments and the environment.