Within 30 minutes of the attempted assassination of former President Donald Trump, Elon Musk did what he had previously promised not to do.
“I fully endorse President Trump and hope for his rapid recovery,” the billionaire posted on X. So much for that vow to stay on the sidelines.
But it didn’t stop there. Days later, The Wall Street Journal reported that Musk planned on donating vast sums of his own wealth to a super PAC supporting Trump, possibly upwards of $45 million a month. (Musk later disputed the report, calling it “FAKE GNUS.”)
Whether he plans on flooding the election with cash or not, Musk’s MAGA awakening is probably pretty befuddling for his fan base. After all, Musk has staked his legacy on shifting the world to renewable energy, and Trump is widely seen as an accelerant for climate change.
Musk’s MAGA awakening is probably pretty befuddling for his fanbase
Trump also poses a unique threat to Tesla, which is the source of most of Musk’s wealth. He has said in no uncertain terms that if elected he would roll back all of the Biden administration’s investments in EV charging infrastructure and incentives. And he has made electric vehicles an attack line in his campaign, calling them expensive, overweight, and impractical.
“I have no objection to the electric vehicle, the EV,” Trump said in a recent 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 at the Republican National Convention in Milwaukee, Trump said that he would end the “EV mandate” on “day one” of his administration. That could also include the new automobile standards aimed at slashing greenhouse gas emissions and spurring more EV sales.
If Trump wins and he succeeds in reversing President Joe Biden’s Inflation Reduction Act, the impact would be felt in Tesla’s vehicle sales. Today, anyone shopping for a new Tesla Model 3 or Model Y will likely be able to take up to $7,500 off the purchase price at the point of sale, thanks to Biden’s EV tax credit. Meanwhile, used Teslas qualify for a $4,000 tax credit. The incentives bring the price for the new rear-wheel-drive Model 3 below $30,000 — even lower when you apply state credits.
It’s no secret that Tesla’s sales have been lackluster this year. Rising competition has forced the company to slash prices, hurting its once-vaunted profit margins. And Musk’s online antics have further eroded the brand’s reputation. Tesla sales dropped 6.3 percent for the second quarter in 2024, even as total EV sales climbed 7.3 percent, according to Kelley Blue Book.
Trump also poses a unique threat to Tesla
Now Musk is risking even further bleeding by throwing his support with Trump, who will no doubt do everything in his power to eliminate EV spending if he is elected. House Republicans have already fired several shots across the bow, voting for several proposals that would roll back the IRA or scrap the EV tax credit. Trump would happily sign any of these bills if given the chance.
Of course, if Tesla’s tax credits go bye-bye, so would everyone else’s. One could argue that the legacy auto industry relies on the government’s largesse more than Tesla, which has a huge head start in EV production, has multiple factories operating around the globe, and has already built a reliable network of EV charging stations. Without the credits, the Model 3 would still likely be one of the most affordable options out there, while other automakers’ EVs would suddenly become more expensive. And their efforts to introduce more affordable models are still years away from fruition.
Musk has been a critic of the tax credits in the past, arguing that the industry should stand on its own with government handouts. He also said that the government shouldn’t be funding EV charging stations. “Take away the subsidies,” he said on X earlier this week. “It will only help Tesla.”
But you don’t need to look too far back to see the limits of this viewpoint. Tesla got its start thanks to a $475 million loan from the Department of Energy at a critical time in the company’s history. Several experts have noted that Tesla likely wouldn’t have survived, nor turned into the global powerhouse it is today, without the federal loan. Musk’s other companies also heavily rely on government contracts, including SpaceX and its Starlink internet business.
Musk clearly has a cordial relationship with Trump; the two apparently chat a lot over the phone. And despite pouring billions of dollars into EV development, the Biden administration has always kept Musk and Tesla at arm’s length, snubbing them from White House events and omitting their names from press announcements. Musk bashed Biden as “not the friendliest” administration back in 2021.
The Biden administration has also taken a sharper look at Tesla’s autonomous driving technology, opening investigations that could potentially result in charges of securities and wire fraud. Musk is probably hoping to nip these probes in the bud by supporting Trump’s bid for the White House.
Musk clearly has a cordial relationship with Trump
If he succeeds, one can imagine some short-term successes for Tesla. The EV tax credits are scrapped, as are any investigation into the company’s self-driving claims. Corporate taxes are cut, business regulations fall by the wayside, and Tesla becomes less encumbered by allegations of labor abuse or racial and gender discrimination. Meanwhile, Musk’s pet causes like immigration crackdowns and gender conformity become the law of the land.
But there is so much more to lose, including Tesla’s stated goal of accelerating “the world’s transition to sustainable energy,” as it claims on its website. A Trump victory would be extremely bad for the planet and for the renewable energy sector. The former president has long railed against solar and wind power. And the Republican Party is a major ally of the oil and gas industry. These are not forces that will usher in a cleaner, more sustainable planet. Quite the opposite.
Musk once said that he would never get involved in politics and that, when he does, he usually has to hold his nose. Perhaps he should have followed his own advice and stayed out of this race.
