Elon Musk’s ties to Trump will reverberate through Tesla, other interests

NEW YORK – Billionaire Elon Musk stands to benefit greatly from his ties with US President-elect Donald Trump after the Tesla chief executive became one of Trump’s most important supporters during the 2024 campaign.

Tesla shares jumped 14 per cent on Nov 6 after

Trump defeated Vice-President Kamala Harris.

Mr Musk donated millions of dollars to Trump’s campaign. Trump has said he will establish a government efficiency commission headed by Mr Musk to cut federal spending.

His influence is expected to be significant at a time when Mr 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.

Mr Musk was a beneficiary of some policies Trump disliked, including the solar and electric-vehicle (EV) credits included in the Inflation Reduction Act passed by President Joe Biden in 2022.

Trump’s desire to reduce EV mandates may hurt Mr Musk’s competitors more than it hurts Tesla due to its volume of sales.

A group representing the EV industry on Nov 6 said it was ready to work with Trump, who has vowed to reverse many pro-EV policies of his predecessor.

‘Hedged his bets’

“Musk basically hedged his bets by his association with Trump and likely will get favourable treatment from the Trump administration,” said Mr Dennis Dick, trader at Triple D Trading.

Regulatory approval for Full Self Driving is going to be a big hurdle for Tesla, but Mr Musk is likely to get regulatory approvals more quickly with Trump on his side, Mr Dick said.

Tesla is set to add more than US$110 billion (S$146.7 billion) to its market value, if gains hold.

Shares of EV companies Lucid Group and Rivian Automotive fell 7.5 per cent and 9.4 per cent, 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 per cent overnight.

It is not clear how Mr Musk will address his conflicts of interest in the auto, 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 Mr Musk “influence over US policy on AI, space exploration and EVs – all which Mr Musk has a direct interest in via Tesla and other ventures”, said Ms Mamta Valechha, consumer discretionary analyst at Quilter Cheviot.

Mr 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 – Mr Biden’s signature climate law.

However, Republican-dominated states have seen big gains from the law; Mr Musk is building his second US EV factory in Texas. REUTERS