Elon Musk's bold support for Donald Trump in the 2024 election comes with potential rewards and risks for his empire.
November 6, 2024
Digital Worldwide News
Donald Trump and Elon Musk conversing at a campaign rally. The billionaire donated more than $100 million to a super PAC supporting the president elect in the campaign period
Elon Musk went all in on Trump’s 2024 election bid, supporting him financially and politically like no other tech mogul. From pouring $119 million into pro-Trump PACs to hosting interviews with him on his platform, X, Musk made his allegiance clear.
But with Trump’s win, Musk faces both lucrative rewards and significant risks for his empire.
Tesla stocks surged 13% the morning after Trump’s victory, a clear nod from investors who foresee a Musk-friendly environment. The boost added a staggering $13 billion to Musk’s net worth—an eye-popping 11,000% return on his Trump investment.
Yet the benefits for Musk's ventures aren’t entirely guaranteed.
Trump’s stance on electric vehicles (EVs) could reduce or even eliminate federal EV subsidies, threatening incentives for Tesla’s buyers. Federal support for EVs has included tax credits and grants, critical elements in building the U.S. EV market.
Musk’s response? Surprisingly calm. He’s expressed belief that Tesla can thrive even without subsidies, arguing that they actually benefit his competition more.
Trump’s administration could be more lenient toward Tesla’s autonomous vehicle plans, such as self-driving and “robotaxis.” Analysts, like CFRA’s Garrett Nelson, suggest that Trump’s policies could accelerate approvals Musk needs to expand Tesla’s autonomous tech.
This shift could give Musk a boost in making Tesla’s cars fully autonomous—an achievement he’s been chasing for years.
Tesla isn’t the only automaker in the EV game, and traditional companies are committed to the EV transition. Giants like Ford have reaffirmed their stance on sustainable cars, regardless of regulatory changes. Even if Trump relaxes emissions regulations, they have to meet international standards in markets like Europe and Asia.
Trump may dial back domestic requirements, but these broader commitments mean competition will remain fierce for Tesla.
Trump’s approach to China poses a larger threat. Tesla’s Shanghai plant is integral to its sales and profitability, accounting for over 40% of its production. An escalating trade war could disrupt this profitable channel, squeezing Tesla’s revenues.
If Musk has to navigate renewed tariffs or trade restrictions, Tesla could face major financial setbacks.
Reports suggest Trump might tap Musk to lead government efforts to cut wasteful spending. While Musk’s influence in the administration could bring perks to his companies, the downside is more time away from Tesla.
Tesla’s investors would likely prefer Musk’s undivided attention, given the brand’s evolving competitive landscape.
Compared to Tesla, Musk’s other ventures face less turbulence. SpaceX continues its NASA partnerships, securing government contracts that will likely remain stable, regardless of the administration. X (formerly Twitter), meanwhile, is a smaller part of Musk’s portfolio, though it has attracted political backlash.
Under Trump, X may see a friendlier regulatory climate, letting Musk focus on revamping the platform to recoup some of its financial losses.