By Chris Isidore | CNN
New York – No single business leader has supported former President Donald Trump's candidacy greater than Elon Musk. But after Trump won back the presidency in Tuesday's election, there are each positives and negatives ahead for the billionaire and his business empire.
According to Federal Election Commission filings, Musk has to date donated nearly $119 million to a political motion committee he set as much as support Trump. He has appeared with Trump at rallies and conducted a fawning interview with him on X, his social media platform.
“He has put a lot into it here. He jumped into the deep end this election,” said Daniel Ives, technology analyst at Wedbush Securities.
By early Wednesday, investors were already betting that Trump's victory would even be a win for Musk's largest public holding, Tesla (TSLA), causing shares of its electric vehicle maker to instantly jump 13% at market open and end regular trading up nearly 15%. This increased the worth of the 411 million Tesla shares that Musk fully owns by greater than $15 billion, a 12,761% return on the $119 million he donated to Trump. It was a two-year high for Tesla shares, which have struggled recently and were up just 1% for the yr through Tuesday's close.
But a Trump victory also poses risks for Tesla.
Much of Musk's enormous net value is as a consequence of the federal government support his corporations like Tesla and SpaceX have received through the years. Even if Vice President Kamala Harris had won, much of that cash would have continued to flow. But even when some government support for electric vehicles is cut or eliminated now, as is prone to occur after Trump's victory, Musk's fortunes will still remain intact. In fact, Tesla may gain advantage if government support for electric vehicles ends.
What a Trump victory means for Tesla
Musk posted quite a few tweets He celebrated Trump's victory on his social media platform X late Tuesday and early Wednesday.
“The people of America gave @realDonaldTrump a crystal clear mandate for change tonight,” he wrote in certainly one of them.
Trump has openly opposed electric vehicles, saying they’re too expensive, have limited range and would destroy jobs and the American auto industry. But what might appear to be the most important blow to Tesla from one other Trump presidency — a cut, if not an end, to federal support for electric vehicles — won’t be so bad for Tesla and Musk.
But other policy areas which might be at the middle of Trump's plans could also result in major problems.
Trump has vowed to finish what he calls “Biden's EV mandate,” although there is no such thing as a such mandate and it’s unclear what he’s referring to.
But under Biden, there was significant government support for constructing and buying electric vehicles, including billions of dollars in loans to encourage automakers to take a position in factories to construct electric vehicles and batteries within the United States, support for charging stations and a federal tax credit $7,500 for a lot of electric vehicle automotive buyers.
Many industry experts consider Trump will end these programs. Trump could direct the Treasury Department to vary the principles that determine when automotive buyers are eligible for the tax credit, which might significantly limit the tax credit's availability. Or, if Trump has a Republican-controlled Congress, he could pass a law to eliminate the credit entirely.
But Musk has said he isn't apprehensive concerning the end of the tax credit because Tesla sees it as a boon to legacy automakers' efforts to maneuver into the electrical vehicle market and produce more competition.
“Take away the subsidies. “It will only help Tesla,” Musk said posted on X in July.
Due to increasing competition, Tesla's global sales fell 2% in the primary nine months of this yr in comparison with last yr. Sales and profits improved within the third quarter, even though it was the primary time in the corporate's history that there was such a decline.
Self-driving vehicle policies could change
CFRA Research analyst Garrett Nelson agreed.
“In our view, Tesla and CEO Elon Musk may be the biggest winners from the election results, and we believe Trump's victory will help accelerate regulatory approval of the company's autonomous driving technology,” he said in a note to clients and raised its suggestion on Tesla shares from “Hold” to “Buy.” He raised his 12-month price goal on the stock by $110 to $375 per share.
So far, the corporate's existing driver assistance features, often known as Autopilot and Full Self-Driving (FSD), are under investigation by federal safety regulators after a series of accidents involving the technology. This research could slow the approval of true self-driving Tesla cars on the roads, despite Musk's widely controversial claims that Teslas with FSD are already safer than human-driven cars.
“Under Trump, these investigations could slowly disappear,” Ives said.
All federal support for electric vehicles is unlikely to vanish in Trump's next administration. Aside from the customer tax credit, much of the tax money spent to support electric vehicle adoption is available in the shape of presidency loans to automakers and their suppliers to construct plants in southern “red” states. It's unlikely that Trump would need to cut that support and the promise of jobs in those states, even in the event that they would ultimately provide competition to Musk and Tesla.
Traditional automakers say they may move forward with plans to construct and sell more electric vehicles in the longer term. They say electric vehicles are the longer term of the industry, although adoption rates have slowed recently.
“It's not a strategy where we're going to obstruct the presidential election or the next one and the next one and see what we can do with the EPA,” Ford CEO Jim Farley told investors in July. “The only way we think it's sustainable is to make money from small electric vehicles. And that’s our bet.”
Automakers are pushing to sell more electric vehicles so corporations can meet increasingly stringent environmental regulations within the United States, Europe and Asia. Even if Trump gets the EPA to vary emissions rules here, automakers will still have an incentive to proceed constructing electric vehicles to satisfy regulations elsewhere or to satisfy stricter environmental regulations in lots of U.S. states, including California, which has its own stricter ones has emissions regulations that many other states follow.
Industry experts don't expect growth in electric vehicle sales to stop even when Trump changes emissions regulations, partly as a consequence of growing consumer demand.
“We could see a much slower adoption of electric vehicles (with a change in regulations),” said Jeff Schuster, global head of automotive at GlobalData, an industry consultant. “But with all the investments, we are unlikely to see a reversal.”
Trump's China policy could harm Tesla
The greater problem for Tesla with Trump's victory is that it could lead on to a different trade war with China, Ives said, given the importance of its Shanghai factory to its global sales and profits.
With Trump's victory, “he's going to be much tougher on China, and then the negatives could outweigh the positives for Tesla,” Ives said. “Over 40% of deliveries come from the Chinese market. Tesla would be caught in the crossfire.”
And it may be an issue for Tesla if Trump taps Musk He is predicted to steer his administration's efforts to scale back so-called government waste, because the two mentioned through the campaign.
Whatever the end result of those efforts, and whether or not Musk has a proper or informal government role in Trump's latest administration, the last item Tesla investors need to see is Musk becoming much more distracted from his time as Tesla boss said Ives.
“It's more time away from Tesla while wanting to pay more attention to Tesla,” Ives said.
Less impact on SpaceX and X
Musk's other major company, SpaceX, likely wouldn’t have had a significantly different relationship with the federal government regardless of who’s elected. Its important competitor is Boeing have serious problems with spacecraft commissioned by NASA to hold astronauts to and from the International Space Station.
And Musk's ownership of X has been widely criticized, especially by Democrats, for spreading misinformation. But it has not been halted or hindered by government motion under Biden, and the brand new Trump administration is unlikely to take motion on it either. And given the financial losses since purchasing the corporate, it now represents a comparatively small portion of Musk's total net value.
The CNN Wire
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