Thirty minutes after the assassination attempt on former President Donald Trump, Elon Musk did what he had previously promised not to do.
“I fully support President Trump and look forward to his speedy recovery,” the billionaire posted on x. That was the end of his promise to stay away.
But it didn't stop there. Days later, The Wall Street Journal reported that Musk planned to donate large sums of his own wealth to a super PAC supporting Trump, possibly more than $45 million a month. (Musk later disputed the report, calling it “FAKE GNUS.”)
Whether or not he plans to flood the election with cash, Musk’s awakening to the idea of MAGA is likely to be quite disconcerting to his fan base. After all, Musk has staked his legacy on shifting the world toward renewable energy, and Trump is widely seen as an accelerator of climate change.
Musk's MAGA awakening is probably quite disconcerting for his fan base
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 Biden administration investments in infrastructure and incentives for electric vehicle charging. And he has made electric vehicles an attack issue 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 electric cars. We can’t electrify our cities.”
And at the Republican National Convention in Milwaukee, Trump said he would end the “electric vehicle mandate” on “day one” of his administration. That could also include new auto standards aimed at reducing greenhouse gas emissions and spurring more electric vehicle sales.
If Trump wins and succeeds in reversing President Joe Biden’s Inflation Reduction Act, the impact would be felt in Tesla vehicle sales. Today, anyone who buys a new Tesla Model 3 or Model Y will likely be able to knock up to $7,500 off the purchase price at the point of sale, thanks to Biden’s electric vehicle tax credit. Used Teslas, meanwhile, qualify for a $4,000 tax credit. The incentives drive the price of the new rear-drive Model 3 down to below $30,000 — even lower when state credits are applied.
It’s no secret that Tesla’s sales have been lackluster this year. Rising competition has forced the company to cut prices, hurting its once-vaunted profit margins. And Musk’s internet antics have further eroded the brand’s reputation. Tesla sales fell 6.3 percent in the second quarter of 2024, even as overall electric vehicle sales rose 7.3 percent, according to Kelley Blue Book.
Trump also poses a unique threat to Tesla
Now Musk risks further bleeding by supporting Trump, who will no doubt do everything in his power to eliminate spending on electric vehicles if elected. House Republicans have already fired several warning shots, voting in favor of several proposals that would shrink the IRA or eliminate the EV tax credit. Trump would be happy to sign any of these bills if he had the chance.
Of course, if Tesla’s tax credits go away, so will everyone else’s. One could argue that the traditional auto industry relies on government largesse more than Tesla, which has a huge head start in EV production, has multiple factories operating around the world, and has already built a reliable network of EV charging stations. Without the credits, the Model 3 would likely remain one of the most affordable options out there, while other automakers’ EVs would suddenly become more expensive. And its efforts to introduce more affordable models are still years away from fruition.
Musk has criticized tax credits in the past, arguing that the industry should be able to fend for itself with government handouts. He also said the government should not fund electric vehicle charging stations. “Get rid of the subsidies,” he said on x earlier this week. “It will only help Tesla.”
But you don’t have to look too far back to see the limits of this view. 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 probably wouldn’t have survived or become the global powerhouse it is today without the federal loan. Musk’s other companies also rely heavily on government contracts, including SpaceX and his Starlink internet business.
Musk clearly has a cordial relationship with Trump; the two reportedly talk on the phone a lot. And despite investing billions of dollars in electric vehicle development, the Biden administration has consistently kept Musk and Tesla at arm’s length, shunning them from White House events and omitting their names from press releases. Musk criticized Biden as the “not the friendliest” administration in 2021.
The Biden administration has also taken a closer look at Tesla’s self-driving technology and opened investigations that could lead to allegations of securities and wire fraud. Musk likely hopes to nip these in the bud by supporting Trump’s White House bid.
Musk clearly has a cordial relationship with Trump
If he pulls it off, we can imagine some short-term successes for Tesla. Tax credits for electric vehicles are eliminated, as are any investigations into the company’s claims about autonomous driving. Corporate taxes are cut, business regulations fall by the wayside, and Tesla is less plagued by accusations of labor abuse or racial and gender discrimination. Meanwhile, Musk’s pet causes, such as cracking down on immigration and gender conformity, become the law of the land.
But there is much more to lose, including Tesla’s stated goal of accelerating “the world’s transition to sustainable energy,” as it states on its website. A Trump victory would be extremely bad for the planet and for the renewable energy sector. The former president has long been a critic of 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 he would never get involved in politics and that when he does, he usually has to hold his nose. Maybe he should have followed his own advice and stayed out of this race.
