[Energy-topia] Can the Changed Musk Persuade Trump?

Trump, Who Called for Repeal of EV Mandates,
Says "I'm Not Against EVs" in Subtle Shift
Musk States, "I Am Persuasive"

Elon Musk, CEO of Tesla. [Image source=Yonhap News]

With the U.S. presidential election coming up this November, one of the biggest concerns among domestic investors is the fate of the U.S. Inflation Reduction Act (IRA). Leading candidate former President Donald Trump has repeatedly expressed opposition to the Biden administration's electric vehicle (EV) mandate policy. If Trump returns to power and abolishes the IRA's EV subsidy regulations, domestic automakers selling EVs in the U.S. and Korean companies supplying batteries will inevitably be impacted. Korean battery companies have invested tens of trillions of won, anticipating an expansion of the U.S. EV market.

Meanwhile, Tesla CEO Elon Musk has actively endorsed Trump, drawing attention to his role. Trump’s selection of Senator J.D. Vance as his vice-presidential candidate was partly influenced by the power of Silicon Valley big tech companies, including Musk. Musk, who previously supported former President Barack Obama, changed his stance during the Biden administration due to excessive regulations on big tech. President Biden did not even invite Musk to the White House’s EV event.

What might Musk be thinking as he supports Trump, who intends to repeal the EV mandate? Some analyze that removing EV subsidies could be more detrimental to latecomer EV companies like GM and Ford, while it might actually benefit Tesla, the undisputed leader. On June 16, Musk posted on social media platform X (formerly Twitter), "Get rid of subsidies. They only help Tesla," and added, "Eliminate subsidies in all industries." However, it would be premature to conclude that Musk supports Trump based solely on this simplistic logic.

If the new U.S. administration abandons policies to expand EVs, it would not be positive for Tesla in the long run. Tesla competes not only in the U.S. but also globally. Despite U.S. and European checks, Chinese automakers like BYD are accelerating their overseas expansion. Tesla posted disappointing results in the second quarter. If the U.S. loses leadership in the EV and eco-friendly vehicle market to China, it would not be good news for Trump, who champions the slogan "Make America Great Again (MAGA)."

Perhaps for this reason, signs have emerged that Trump’s stance on EVs is softening. According to a New York Times (NYT) report, Trump said at a rally on the 20th, "I have consistently talked about EVs, and I am not against them. In fact, I fully support them." He added, "I have driven an EV, and it was amazing," but also said, "But EVs are not for everyone." Interpreting this, it seems he acknowledges that EVs are good but believes there is no need to mandate them for all citizens.

It is unclear how much Musk has contributed to this change in Trump’s perception. Since March this year, Trump is known to have frequently met with Musk to discuss EVs. At a shareholders’ meeting in June, Musk responded to a question about Trump by saying, "I am persuasive," and added, "Many of Trump’s friends own Tesla, and Trump likes the Cybertruck. These things could help persuade him."

Reports are pouring in that the EV market would suffer if Trump returns to power. Domestic battery-related companies are also postponing investment decisions until after the U.S. election. However, with the world moving toward eco-friendly vehicles, the U.S. may slow down but cannot change direction. If the U.S. abandons EVs, it cannot become the great nation Trump so fervently calls for.