Billionaire Elon Musk stands to benefit greatly from his ties with US president-elect Donald Trump after the Tesla CEO became one of Trump's most important supporters during the 2024 campaign.
Tesla shares jumped 12% on Wednesday after Trump defeated Vice President Kamala Harris. Musk donated millions of dollars to Trump's campaign. Trump has said he would establish a government efficiency commission headed by Musk to cut federal spending.
His influence is expected to be significant at a time when Musk already holds considerable power owing to his role as a major contractor with the US department of defence through his ownership of the Starlink satellite broadband system and as CEO of Tesla.
Musk was a beneficiary of some policies Trump disliked, including the solar and electric-vehicle credits included in the Inflation Reduction Act passed by President Joseph Biden in 2022. Trump's desire to reduce EV mandates may hurt Musk's competitors more than it hurts Tesla due to its volume of sales.
“Nobody is making money in EVs aside from Tesla, so the reduction or elimination of EV credits will widen Tesla's competitive moat,” said Garrett Nelson, vice president and senior equity analyst at CFRA Research.
Shares of EV companies Lucid Group and Rivian Automotive fell 2.9% and 7.8%, respectively. In addition, Trump's promises to levy heavy tariffs on Chinese imports, particularly on EVs, would shield Tesla from that competition, analysts said.
Shares of China's BYD dropped 2.3% overnight.
It is not clear how Musk will address his conflicts of interest in the cars, space, health, construction and artificial intelligence industries or whether he will leverage the interests during a Trump administration that takes a hands-off approach to regulation.
A role overseeing deregulation and cutting spending would give Musk “influence over US policy on AI, space exploration and EVs — all which Musk has a direct interest in via Tesla and other ventures,” said Mamta Valechha, consumer discretionary analyst at Quilter Cheviot.
Musk may try to wield his influence to reduce regulatory oversight of his businesses. He has been a vocal critic of federal review of his SpaceX rocket business and wants to speed up approval of his autonomous driving technology.
He is also a big proponent of carbon-free energy, as Tesla is a major supplier of solar systems and batteries. Trump has promised to kill the offshore wind industry and rescind all unspent funds under the Inflation Reduction Act — Biden's signature climate law.
However, Republican-dominated states have seen big gains from the law; Musk is building his second US electric vehicle factory in Texas.
Musk's ties to Trump will reverberate through Tesla
Image: Samuel Corum/Getty Images
Billionaire Elon Musk stands to benefit greatly from his ties with US president-elect Donald Trump after the Tesla CEO became one of Trump's most important supporters during the 2024 campaign.
Tesla shares jumped 12% on Wednesday after Trump defeated Vice President Kamala Harris. Musk donated millions of dollars to Trump's campaign. Trump has said he would establish a government efficiency commission headed by Musk to cut federal spending.
His influence is expected to be significant at a time when Musk already holds considerable power owing to his role as a major contractor with the US department of defence through his ownership of the Starlink satellite broadband system and as CEO of Tesla.
Musk was a beneficiary of some policies Trump disliked, including the solar and electric-vehicle credits included in the Inflation Reduction Act passed by President Joseph Biden in 2022. Trump's desire to reduce EV mandates may hurt Musk's competitors more than it hurts Tesla due to its volume of sales.
“Nobody is making money in EVs aside from Tesla, so the reduction or elimination of EV credits will widen Tesla's competitive moat,” said Garrett Nelson, vice president and senior equity analyst at CFRA Research.
Shares of EV companies Lucid Group and Rivian Automotive fell 2.9% and 7.8%, respectively. In addition, Trump's promises to levy heavy tariffs on Chinese imports, particularly on EVs, would shield Tesla from that competition, analysts said.
Shares of China's BYD dropped 2.3% overnight.
It is not clear how Musk will address his conflicts of interest in the cars, space, health, construction and artificial intelligence industries or whether he will leverage the interests during a Trump administration that takes a hands-off approach to regulation.
A role overseeing deregulation and cutting spending would give Musk “influence over US policy on AI, space exploration and EVs — all which Musk has a direct interest in via Tesla and other ventures,” said Mamta Valechha, consumer discretionary analyst at Quilter Cheviot.
Musk may try to wield his influence to reduce regulatory oversight of his businesses. He has been a vocal critic of federal review of his SpaceX rocket business and wants to speed up approval of his autonomous driving technology.
He is also a big proponent of carbon-free energy, as Tesla is a major supplier of solar systems and batteries. Trump has promised to kill the offshore wind industry and rescind all unspent funds under the Inflation Reduction Act — Biden's signature climate law.
However, Republican-dominated states have seen big gains from the law; Musk is building his second US electric vehicle factory in Texas.
READ MORE
Tesla shares pop as Trump claims victory in 2024 US presidential race
Ferrari’s core profit rises despite shipment dip after software switch
BMW downplays fears over potential US tariffs as car stocks plunge
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most read
Latest Videos