Tesla CEO Elon Musk (R) joins former U.S. President and Republican presidential candidate Donald Trump during a campaign rally at the site of his first assassination attempt in Butler, Pennsylvania, on Oct. 5, 2024.
Jim Watson | Afp | Getty Images
As Donald Trump celebrated his presidential victory early Wednesday morning, Elon Musk was right there with him.
“A star is born. Elon,” Trump said onstage at his Mar-a-Lago resort, thanking the world’s richest person for spending two weeks campaigning in Pennsylvania.
Musk, who poured at least $130 million into a pro-Trump campaign effort, turned Trump support into yet another full-time job in recent months, funding a swing-state operation to register voters and using his social media platform X to constantly tout his preferred candidate, frequently with misinformation.
Musk’s investment in Trump is already paying off, even though Trump doesn’t take office until Jan. 20.
Tesla shares soared 15% on Wednesday, adding roughly $15 billion in paper value to Musk’s net worth. The electric vehicle maker faces headwinds in the global market from China-based competitors, declining European sales and consumers’ growing distaste for his political views.
But with Musk cozying up to Trump, and the president-elect promising to slash the types of regulations that Musk abhors, Wall Street is betting Tesla, on balance, will be a beneficiary.
For Musk, the potential gains go well beyond Tesla.
During his victory speech, Trump also praised Musk’s SpaceX and thanked Musk for delivering Starlink Wi-Fi terminals to Hurricane-stricken parts of the U.S. That all leaves Musk with plenty of reasons to be optimistic that a second Trump administration will pay healthy dividends to him and his businesses.
Musk’s companies are currently embroiled in a range of probes and lawsuits from federal agencies pertaining to matters including alleged securities law violations, workplace safety, labor and civil rights violations, violations of federal environmental laws, consumer fraud and vehicle safety defects.
Given the executive branch’s outsized control over federal regulatory bodies, Musk can look forward to regulators and intelligence agencies winding down some or all of the 19 known ongoing federal investigations and lawsuits against Tesla, SpaceX and X, formerly known as Twitter.
At New York’s Madison Square Garden on Oct. 27, Musk was one of many Trump fans and surrogates to speak during an all-day rally. Much of the coverage of the event focused on comedian Tony Hinchcliffe’s bigoted quips, including his description of Puerto Rico as a “floating island of garbage.”
Musk was introduced by Cantor Fitzgerald CEO Howard Lutnick, who called the Tesla CEO the “greatest capitalist” in U.S. history. Lutnick said he and Musk were co-founders of the envisioned “Department of Government Efficiency” and he asked Musk how much he thought could be cut from the federal budget.
Musk answered “at least $2 trillion,” which is more than the federal government’s discretionary budget of $1.7 trillion. The remark received a scream from Lutnick and applause from the crowd.
Musk didn’t specify what he sought to cut, but he previously accused agencies including the SEC, Environmental Protection Agency and Federal Aviation Administration of regulatory overreach or infringing on his free speech rights.
He also accused the Biden administration of hiring too many IRS personnel, and has vocally objected to a so-called billionaires tax.
Having a role in a bespoke commission could give Musk power over federal agencies’ budgets, staffing and the ability to push for the elimination of inconvenient regulations.
Musk also said during a Tesla earnings call on Oct. 23, that he intended to use his sway with Trump to establish a “federal approval process for autonomous vehicles.” Currently, approvals happen at the state level.
Tesla has been working on driverless technology for more than a decade but hasn’t yet produced a robotaxi or vehicle safe to use without a human ready to steer or brake at any time.
Additionally, a Trump administration may agree to ramp up the government’s work with his companies.
Musk’s newest startup, xAI, is developing large language models and generative artificial intelligence software that aims to compete with similar products from Microsoft-backed OpenAI, Meta and others.
Meta recently announced its open-source Llama models were available to U.S. government agencies in the areas of defense and national security. And OpenAI is already working with the U.S. military after adding a retired U.S. Army general and former director of the National Security Agency to its board in June.
Musk didn’t respond to a request for comment.
SpaceX catches the first-stage “Super Heavy” booster of its Starship rocket on Oct. 13, 2024.
Sergio Flores | Afp | Getty Images
SpaceX’s billions in federal contracts
According to research on federal spending and prime contracts by FedScout, SpaceX has received more than $19 billion from contracts with the federal government since 2008, including from NASA, the U.S. Air Force and Space Force.
The company is on track to take in several billions of dollars annually from prime contracts with the federal government for years to come, according to FedScout CEO Geoff Orazem.
That number doesn’t include classified spending, smaller items like Starlink terminals, or spending that’s done at the state level via block grants from the federal government, like when the Federal Emergency Management Agency gives states assistance to help recover from natural disasters.
Meanwhile, Tesla has reported around $10 billion in sales of “automotive regulatory credits,” or environmental credits, since 2015, Orazem found by evaluating the company’s financial filings.
These incentives are largely derived from federal and state regulations in the U.S. that require automakers to sell some number of low-emission vehicles or buy credits from companies like Tesla, which often have an excess.
Regulatory credits were about 60% of Tesla’s net income in the second quarter of 2024, and 39% in the third quarter. Other government rebates on EV sales represented about 50% of Tesla’s third-quarter profit.
Trump hasn’t made clear whether he’ll maintain those rebates and regulatory credit programs. He previously said he may cut the federal $7,500 EV tax credit.
Additionally, Trump has promised to slash income taxes and to implement steep tariffs. While tariffs could help protect Tesla from Chinese competitors, such a move could involve significant disruption to Tesla’s automotive supply chain, which relies on some materials and parts from China.
When it comes to worker protections, Musk has been seeking to strike down the constitutional authority of the National Labor Relations Board through litigation. He may find such lawsuits are no longer needed if Trump is willing to eliminate or reduce the power of the agency, which is supposed to ensure that companies follow federal laws allowing workers to form unions and engage in collective bargaining with their employers.
Then there’s Musk’s involvement with sanctioned governments.
At SpaceX, Musk has withheld the use of Starlink, the company’s satellite internet service, over Taiwan, even for U.S. troops based there. The Wall Street Journal reported that Musk cut off access as a favor requested by Russian President Vladimir Putin allegedly on behalf of Chinese President Xi Jinping during a series of ongoing, frequent talks between the two men.
In response to the reports, NASA Administrator Bill Nelson said if they were true, Musk’s conversations with Putin should be be federally investigated.
According to analysis by NBC News, Musk has repeatedly posted pro-Kremlin content to his hundreds of millions of followers on X. He even engaged with content from Tenet Media and its creators at least 60 times on the social network. Tenet was at the center of an alleged Russian covert operation to manipulate U.S. public opinion ahead of the 2024 election, according to the Department of Justice.
While Vice President-elect JD Vance recently called Putin a U.S. adversary, Trump has frequently spoken of his affection for the Russian president, even since Russia’s devastating invasion of Ukraine in 2022. Kremlin officials have celebrated Trump’s victory in this week’s election.
Musk, who publicly endorsed Trump moments after the first assassination attempt on the former president in July, has said he intends to remain involved in U.S. politics for the long haul.
He said in a discussion on X on Tuesday that his super PAC would continue its work after the presidential election and would seek to influence the outcomes of midterms, intermediate elections and elections of local prosecutors across the U.S.
A priority, Musk said, would be to help elect district attorneys “who prosecute repeat violent criminals who are obviously a danger to people.”
