Trump Supports Musk
Musk Gains Competitive Edge by Abolishing IRA
Former President Donald Trump, who had maintained a negative stance on electric vehicles (EVs) for years, has recently changed his attitude. He has made positive remarks about EVs and flaunted his close relationship with Elon Musk, CEO of Tesla, the leading EV company. Musk also recently expressed public support following the assassination attempt on Trump. Although it may seem contradictory for an anti-EV politician and the head of the top EV company to join forces, it benefits both parties.
According to the New York Times (NYT) on the 23rd (local time), Trump said at a rally in Michigan on the 20th, "I constantly talk about electric cars, but that doesn't mean I am against them," adding, "I fully support electric cars. I've driven them, and they're really great, but they are not suitable for everyone."
In a recent Bloomberg Businessweek interview, Trump said, "I think electric cars are great, and Elon is fantastic."
In the past, Trump called electric cars a "job killer," claiming they would kill the American auto industry. He also warned that if he were not elected, the auto industry and the entire country would face a "bloodbath."
However, Trump has recently stopped using harsh language against EVs and instead attacks environmental regulations and incentive programs related to EVs. His stance is that anyone who wants to buy an EV can do so, but the government should not shape the auto market.
NYT analyzed that this change in attitude followed a meeting with Musk in March. Last month, Musk revealed at a shareholders' meeting that he frequently discusses various topics, including EVs, with Trump. He also said, "Many of Trump's friends own Teslas, and Trump is a big fan of the Cybertruck."
NYT interpreted that the reason Trump, who has an anti-EV stance, and Musk, who leads an EV company, have joined forces is that cooperation benefits both.
For Trump, the support of Musk, a successful businessman popular among Republicans, is helpful. Republican consultant Mike Murphy said, "If you name one thing Republicans like about electric cars, it's Elon Musk." Although Musk denied reports that he donates $45 million monthly in political contributions, his declaration of support itself empowers Trump.
Musk stands to benefit if the Biden administration's Inflation Reduction Act (IRA) EV subsidies are repealed. The IRA offers up to $7,500 in tax credits to EV buyers, but due to conditions such as the exclusion of Chinese-made parts, some Tesla models currently do not qualify. However, if Trump returns to the White House and repeals the IRA, sales of Tesla's competitors like GM and Ford, which have benefited from the subsidies, would sharply decline.
Recently, Musk stated on his social media platform X (formerly Twitter), "Get rid of the (EV) subsidies," adding, "That (subsidy repeal) will only help Tesla." When asked about Trump's pledge to repeal the IRA, he replied, "It would be fine."
James Pethokoukis, senior fellow at the right-wing think tank American Enterprise Institute, said, "From a business perspective, Musk has no downside risk," adding, "Would the Trump administration weaken the only American company that successfully manufactures EVs, employs 150,000 people, and is headquartered in Texas? Moreover, the CEO donates heavily to the Republican Party and supports Trump."
Wall Street also believes Tesla is likely to maintain profitability without subsidies. Tesla is already far ahead in production and has a large charging infrastructure, so it would not be as affected as traditional manufacturers like GM and Ford.
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