Sunday, December 22
Elon Musk, the billionaire behind SpaceX, Tesla, and social platform X, has become a central figure in Donald Trump's return to the White House. In his victory speech at Florida’s Palm Beach, Trump thanked Musk, calling him a “new star” and acknowledging the critical support he received throughout his campaign.
“Elon is a new star; a star is born,” Trump declared, going on to praise Musk as a “super genius” and stressing the importance of protecting such visionaries: “We have to protect our geniuses.”
With Trump now poised to lead the country, here are some potential pros and cons for Musk’s business empire under the 47th US president.
Musk's Financial Windsfall and Risks
Musk, who contributed significantly to Trump’s campaign, is likely to face both opportunities and risks in his business ventures during Trump’s second term.
Tesla (TSLA), Musk’s electric vehicle giant, saw a significant boost in its stock price following Trump’s victory, climbing 12% in premarket trading. This surge translated to a more than $12 billion increase in Tesla's market value — far surpassing the $119 million Musk personally donated to Trump’s campaign. Still, despite the immediate positive reaction, Tesla’s future remains uncertain, even with Trump in power.
Much of Musk’s immense wealth has been built on government support, particularly for his companies SpaceX and Tesla, which have benefited from federal funding and tax incentives over the years. Under a Trump administration, some of this support may be reduced or eliminated, especially for electric vehicles (EVs), though Musk’s fortune may remain largely unaffected. If government backing for EVs decreases, Tesla could actually benefit by facing less competition from government-subsidized companies.
Trump’s Stance on Electric Vehicles
Trump has long been critical of electric vehicles, citing their high costs, limited range, and potential negative impact on the American auto industry and jobs. He has pledged to dismantle what he calls “Biden's EV mandate,” which provides government incentives for manufacturing and purchasing electric vehicles.
Industry experts suggest that Trump could eliminate tax credits for EV buyers, potentially reducing consumer demand. If Trump gains full control over Congress, he could also seek to end these incentives entirely. However, Musk has indicated that Tesla does not rely heavily on these subsidies and would still thrive even if such programs are cut. He has also stated that the elimination of subsidies would benefit Tesla by reducing competition from legacy automakers entering the EV market.
“Take away the subsidies. It will only help Tesla,” Musk wrote on X in July.
Robotaxis and Autonomous Vehicles: A Possible Trump Endorsement?
Trump’s administration could potentially align with Musk’s vision for the future of autonomous vehicles. Daniel Ives, a tech analyst at Wedbush Securities, suggested that Trump may support Musk’s push for fully autonomous cars and the development of “robotaxis” — driverless vehicles that could provide rides without human intervention. This aligns with Trump’s pro-business stance and his tendency to embrace cutting-edge technologies that promise job creation and economic growth.
The China Factor: A Trade War Threat to Tesla?
While Musk’s companies are well-positioned in the global market, particularly in China, Trump’s more hawkish approach to Beijing could pose risks. Ives warned that Trump’s victory could reignite the US-China trade war, potentially harming Tesla’s interests. The Chinese market accounts for over 40% of Tesla’s deliveries, making it a critical revenue source. A renewed trade conflict could put Tesla at the center of escalating tensions between the two nations.
"With Trump’s victory, he’ll be much harsher on China, and the negatives could outweigh the positives for Tesla," Ives explained.
Impact on SpaceX and X (formerly Twitter)
Musk’s space exploration company, SpaceX, is likely to continue its close ties with the US government, regardless of who occupies the White House. SpaceX competes with Boeing for NASA contracts, and despite any challenges, the company’s government partnerships are expected to remain strong under Trump.
However, Musk’s management of X (formerly Twitter) has attracted criticism, especially from Democrats, for the platform’s role in spreading misinformation. While the Biden administration did not take significant action against X, it’s unlikely that the Trump administration will either, given Musk’s influence and the platform's growing significance in political discourse.
Overall, while Musk's relationship with Trump could offer certain advantages, particularly in the fields of autonomous vehicles and space exploration, it also carries risks, especially related to trade tensions and the shifting landscape of EV policies. The coming years will likely present both challenges and opportunities for Musk’s sprawling business empire.
0 Comments:
Leave a Reply