The Tesla logo on a vehicle in Charlotte, N.C., on Feb. 27.Chris Carlson/The Associated Press
Billionaire Elon Musk stands to benefit greatly from his ties with U.S. president-elect Donald Trump after the Tesla Inc. chief executive became one of Mr. Trump’s most important supporters during the 2024 campaign.
Tesla TSLA-Q shares jumped 14 per cent on Wednesday after Mr. Trump defeated Vice-President Kamala Harris. Mr. Musk donated millions of dollars to Mr. Trump’s campaign. Mr. Trump has said he would 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 U.S. 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 Mr. Trump disliked, including the solar and electric-vehicle credits included in the Inflation Reduction Act passed by President Joe Biden in 2022. Mr. Trump’s desire to reduce EV mandates may hurt Mr. Musk’s competitors more than it hurts Tesla owing to its volume of sales. A group representing the EV industry said on Wednesday it was ready to work with Mr. Trump, who has vowed to reverse many pro-EV policies of his predecessor.
“Musk basically hedged his bets by his association with Trump and likely will get favourable treatment from the Trump administration,” said 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 Mr. Trump on his side, Mr. Dick said.
Tesla is set to add more than US$110-billion to its market value, if gains hold.
Shares of EV companies Lucid Group Inc. and Rivian Automotive Inc. fell 7.5 per cent and 9.4 per cent, respectively. In addition, Mr. 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 Auto Co. Ltd. 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 U.S. 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.
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. Mr. 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 U.S. EV factory in Texas.