What a Trump Win Could Mean for Tesla Owners and Shareholders
Written by
Vance Cariaga
Edited by
Daria Uhlig
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Ex-president Donald Trump has been a fierce critic of government efforts to boost the electric vehicle industry through subsidies and tax credits. As NBC News reported, Trump suggested that pro-EV policies will “kill” the auto industry and trigger an “assassination” of jobs. Trump also has promised to increase oil production to prop up gas-powered cars.
Given this rhetoric, you’d think EV leader Tesla would suffer under a second Trump term. But that’s not necessarily the case. For one thing, Telsa CEO Elon Musk recently endorsed Trump for president, which might have led Trump to soften his rhetoric on electric vehicles. As The New York Times reported earlier this week, Trump told a rally in Michigan that he is “totally for” EVs despite his past criticism.
“I’ve driven them and they are incredible, but they’re not for everybody,” the ex-president said.
Meanwhile, Musk recently established a super PAC with the aim of supporting a “meritocracy,” NPR reported, which some experts believe aligns more with Republican than Democrat policies.
“You get ahead as a function of your hard work and your skill, and nothing else,” Musk said in an interview with psychologist and pundit Jordan Peterson, adding that the PAC aims to promote a “freedom to operate, meaning the least amount of government intervention possible.”
That last part — the “least amount of government intervention possible” — is a clear signal that Musk would prefer a president who will take a more hands-off approach to the EV industry than President Joe Biden. Although Tesla and other EV manufacturers have benefited from government efforts to stoke higher sales of EVs, Musk is not a fan of tighter regulations, especially those that involve self-driving technology.
The National Highway Traffic Safety Administration (NHTSA) has cracked down on failures of autonomous driving efforts at Tesla and other companies, Bloomberg reported. Among other things, the NHTSA found that Tesla’s Autopilot system led to “overconfidence” in drivers and contributed to avoidable crashes.
Tesla also settled a lawsuit brought by California’s Department of Motor Vehicles over the company’s Autopilot and Full Self Driving driver-assistance features, according to Bloomberg. And the company’s annual filings “routinely disclose” inquiries from agencies such as the U.S. Department of Justice and the Securities and Exchange Commission.
Those problems, combined with greater competition from other EV makers, have weakened Tesla’s financial returns. The company recently reported a 45% year-over-year decline in earnings, while vehicle sales fell 4.8%. Its share price took a hit following the earnings report, slowing its recent momentum.
Morgan Stanley analyst Adam Jonas, who Investors Business Daily calls a “Tesla bull,” wrote in a post-earnings note that there is “no big change in outlook” at Tesla and that the company is “muddling through the EV recession.”
So how would a second Trump term impact Tesla? One potential problem is that environmentally conscious consumers tend to be politically progressive, which means many favor Democrats. Musk’s embrace of Trump could sour some of them on Tesla.
“EV buyers skew left-of-center politically, given their concerns around climate change and fossil fuels,” CivicScience founder and CEO John Dick told NPR. “When the CEO of a car manufacturer speaks out so publicly in support of a Republican candidate or cause, it will naturally steer those buyers to other brand alternatives.”
On the other hand, should Trump win election and scale back EV subsidies and regulations, that could be a boon to Tesla, experts say.
“EVs are no longer the main justification offered for Tesla’s stock price,” Bloomberg columnist and former banker Liam Denning wrote. “Analysts routinely ascribe only a fraction of the valuation to the EV division — which accounts for four-fifths of Tesla’s revenue — touting instead the potential for robotaxis and robots.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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