“I’m not just MAGA. I’m “dark, gothic MAGA””, Elon Musk roared while addressing a mammoth crowd at Republican presidential nominee Donald Trump’s Madison Square Garden rally on Sunday as the Tesla CEO pointed to his black cap which bore Trump’s slogan “Make America Great Again” printed in a white gothic font.
Musk has become a prominent figure in Donald Trump’s 2024 campaign, showing enthusiastic support despite Trump’s long-standing opposition to electric vehicles (EVs) and green energy policies.
In addition to his presence at rallies, Musk has invested $118 million in a super PAC backing Trump and is offering $1 million daily prizes to swing-state voters.
Beyond financial contributions, Musk’s ownership of X has amplified his impact on Trump’s campaign as he uses the platform to promote pro-Trump rhetoric and rally his 200 million followers.
As election day approaches, Musk’s X feed has become a stream of endorsements for Trump, with frequent criticisms of Vice President Kamala Harris and the Biden administration.
This unexpected alignment has left many questioning why Musk, whose Tesla empire has driven the US EV revolution, is supporting Trump, whose stance on energy remains largely opposed to clean energy policies.
Trump’s anti-EV record
Trump’s opposition to clean energy is no secret.
He has consistently derided climate change initiatives, labeling them “hoaxes” and criticizing the Biden administration’s clean energy and EV policies as “lunacy”.
He has also gone ahead to call for electric car supporters to “rot in hell!”.
One of the most immediate concerns for the EV industry is Trump’s position on the Inflation Reduction Act of 2022 (IRA).
This act, passed in 2022, has fuelled an investment surge in US-based EV manufacturing and infrastructure, prompting companies to invest an estimated $77.6 billion in American EV production.
His 2024 plan intends to eliminate incentives for EV buyers, such as the $7,500 federal tax rebate afforded by the legislation.
Trump’s skepticism towards environmental regulations extends to the Environmental Protection Agency’s (EPA) new rules on tailpipe emissions.
The EPA’s standards are designed to reduce carbon emissions by promoting higher sales of electric and plug-in hybrid vehicles.
Under the proposed regulations, which aim for 56% of new vehicle sales to be electric by 2032, the auto industry is expected to make substantial shifts towards greener technology.
Trump’s opposition to these regulations includes a promise to dismantle the EPA’s rules, which he describes as an “EV mandate” that unfairly targets gas-powered vehicles.
Trump’s rollback of such policies could curb this momentum, impacting EV sales and auto manufacturers, including Musk’s Tesla.
Then why is Musk supporting Trump?
One cue for this riddle may come from Musk’s own words at the MSG rally.
On a spirited question about how much a Republican government could “rip out of this wasted Harris-Biden budget?”, Musk replied, “I think we can do at least $2 trillion”.
“At the end of the day, you’re being taxed. All government spending is taxation, whether its direct taxation or… all goverment spending, it either becomes inflation or its direct taxation. Your money is getting wasted, and the department of government efficiency is going to fix that!”
We’re going to get the government off your back and out of your pocketbook!
Musk may be seeking something else—specifically, a potential shift in regulatory oversight that could benefit his companies’ bottom line.
He has frequently clashed with the Federal Aviation Administration (FAA), the US Environmental Protection Agency (EPA), and Securities and Exchange Commission (SEC).
Each of his major ventures has faced scrutiny: Tesla’s self-driving technology, SpaceX’s launch protocols, and Neuralink’s animal testing practices have all been investigated by federal agencies.
In fact, regulatory pressure has escalated recently.
The FAA has grounded SpaceX launches multiple times due to protocol violations, while the EPA has launched an investigation into SpaceX for allegedly discharging unsafe wastewater.
California, in a recent decision, rejected Musk’s request for additional SpaceX launches in the state, citing both environmental concerns and Musk’s controversial politics.
Meanwhile, Tesla’s push for autonomous vehicles has drawn SEC and National Highway Traffic Safety Administration (NHTSA) scrutiny over the company’s marketing of “Full Self-Driving” technology.
In response to these hurdles, Musk has become increasingly vocal about his anti-regulation stance.
Both Trump and Musk envision a smaller federal government, with reduced funding for agencies like the EPA and FAA.
For Musk, a Trump-led government could mean fewer regulatory barriers, freeing him to accelerate projects across Tesla, SpaceX, and Neuralink with minimal oversight.
The ‘Department of Government Efficiency’ and Musk’s role in it
Establishing his contempt for the agencies, Trump announced in September that he would launch a Musk-led government efficiency commission that would audit federal agencies for places to cut.
During an appearance on Fox News earlier this month, Trump said he would create a new position called “secretary of cost-cutting” and appoint Musk.
“He’s dying to do this,” Trump said.
The “Doge Department,” as Musk has jokingly named it, echoes his views on the need to streamline government functions.
Such a position could give Musk unprecedented influence over the very regulatory bodies that have challenged his companies.
This promise is not without controversy. Critics argue that Musk’s involvement in auditing federal agencies represents a conflict of interest, as he would potentially oversee regulators who influence his business ventures.
But, by supporting Trump’s deregulation agenda, Musk might find a pathway to less interference from agencies he believes stifle technological advancement.
Musk’s influence on Trump’s evolving stance on EVs
Additionally, despite Trump’s historic anti-EV rhetoric, his stance has softened slightly in recent months.
In August, he acknowledged Musk’s support, stating at an Atlanta rally that he was open to a “very small slice” of the automotive market going electric.
“I have to be, you know, because Elon endorsed me very strongly,” he remarked, suggesting that Musk’s endorsement may have tempered his opposition.
Additionally, Trump recently praised Tesla’s products on Musk’s social platform X, formerly known as Twitter, calling them “incredible.”
While he maintains that traditional combustion engines should remain predominant, his positive remarks on Tesla suggest he may accommodate a limited EV market under a Musk-aligned administration.
This shift could indicate that Trump is willing to compromise on his clean-energy stance if it means retaining Musk’s support and financial backing.
EV adoption could be too big for Trump to stifle anyway, say experts
While Trump’s repeal of federal EV credits would impact consumer purchasing power, policy analysts believe it would not fully derail EV adoption.
James Lucier, managing director at Capital Alpha Partners, notes in a Bloomberg report that a Trump administration could introduce tighter regulations on EV tax credits, making it more difficult for vehicles to qualify based on component sourcing.
Yet EV experts argue that the transition to electric vehicles has gained too much momentum to be stopped by federal policy changes alone.
Nick Nigro, founder of Atlas Public Policy, said in the report, “There’s no stopping it,” emphasizing that even if Trump slows the transition, the industry’s trajectory remains irreversible.
Additionally, 17 US states offer EV incentives independent of federal programs.
States like Colorado provide substantial rebates, including up to $5,000 for EV buyers, which ensures that consumers still have access to affordable EV options.
Meanwhile, automakers are preparing for tighter emissions standards in other major markets like California, China, and Europe.
As automakers gear their strategies toward these regions, US policy under Trump may have limited effect on global EV momentum.
What does Musk’s support to Trump mean to Tesla’s investors?
All said and done, Musk is first the chief of a listed company and has investors to be accountable for.
Surely, not every Tesla shareholder would share Musk’s support for Trump, despite Musk’s long-term calculations around his friendship with him.
Ahead of Tesla’s recent earnings, Tesla’s online investor forum received numerous questions from retail shareholders regarding Musk’s political views, his posts on X (formerly Twitter), and his support for Trump’s re-election.
Many expressed concerns about whether Musk’s public activism could impact Tesla’s brand and shareholder value.
One retail investor commented, “Elon Musk’s political activism seems at odds with his role as CEO to protect shareholder value,” sparking a discussion that garnered over 500 upvotes.
Another highly upvoted question asked if Tesla’s board was taking steps to ensure Musk’s political involvement wouldn’t detract from the company’s mission.
Despite these concerns, Tesla reported its most profitable quarter since 2023, pushing the stock up by 22%, and no political questions emerged during the post-earnings call.
Wall Street analyst notes compiled by FactSet showed little mention of Musk’s political activities, and his political views are rarely a topic of discussion at company shareholder meetings.
Tesla’s recent 10-Q filing with the SEC made no mention of Trump or any of Musk’s political activities in the section on “risk factors”.
Though Gene Munster, MD at Deepwater Asset Management and a Tesla bull earlier this month, suggested Musk’s political comments might have lowered US deliveries by 5-10k vehicles, Tesla still reported a 6% year-over-year increase in deliveries for the third quarter, despite missing analysts’ expectations.
The company has used discounts and incentives to boost sales amidst rising competitive pressures.
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