By Nathan Gomes and Zaheer Kachwala
(Reuters) – Billionaire Elon Musk will benefit greatly from his ties with newly elected U.S. President Donald Trump after the Tesla (NASDAQ:) CEO became one of Trump’s top supporters during the 2024 campaign.
Tesla shares closed nearly 15% higher on Wednesday after Trump defeated Vice President Kamala Harris, boosting the company’s market value by about $120 billion. Musk donated millions of dollars to Trump’s campaign. Trump has said he would create a government efficiency commission, led by Musk, to cut federal spending.
His influence is expected to be significant at a time when Musk already has significant power thanks to his role as a major contractor with the US Department of Defense through his ownership of the Starlink satellite broadband system and as CEO of Tesla.
Musk was a beneficiary of a number of policies that Trump hated, including the solar and electric vehicle credits included in the Inflation Reduction Act passed by President Joe Biden in 2022. Trump’s desire to reduce EV mandates could hurt Musk’s competitors more than Tesla due to its sales volume.
A group representing the EV industry said Wednesday it is willing to work with Trump, who has vowed to reverse many pro-EV policies of his predecessor.
‘HIS BETTS HEDGED’
“Musk has effectively hedged his bets through his association with Trump and will likely receive favorable treatment from the Trump administration,” said Dennis Dick, a trader at Triple D Trading.
Regulatory approval for Full Self Driving will be a major hurdle for Tesla, but Musk will likely get regulatory approval more quickly with Trump at his side, Dick said.
Shares of EV companies Lucid Group (NASDAQ:) and Rivian car industry (NASDAQ:) fell 5.3% and 8.3% respectively. Moreover, Trump’s promises to impose heavy tariffs on Chinese imports, especially on electric vehicles, would protect Tesla from that competition, analysts said.
Shares of China’s BYD (SZ:) fell 2.3% overnight.
It’s not clear how Musk will address his conflicts of interest in the automotive, aerospace, healthcare, construction and artificial intelligence industries, or whether he will leverage the interests during a Trump administration that takes a hands-off approach to regulation .
A role overseeing deregulation and budget cuts would give Musk “influence over U.S. policy on AI, space exploration and electric cars – all in which Musk has a direct interest through Tesla and other companies,” said Mamta Valechha, a consumer goods analyst at Quilter Cheviot.
Musk could try to use his influence to reduce regulatory oversight of his companies. He has been an outspoken critic of the federal review of his SpaceX rocket company and wants to accelerate approval of his autonomous driving technology.
He is also a strong supporter of carbon-free energy, as Tesla is a major supplier of solar systems and batteries. Trump has pledged to destroy the offshore wind industry and revoke any unspent funds under the Inflation Reduction Act – Biden’s signature climate law.
However, Republican-dominated states have reaped big gains from the law; Musk is building his second US EV factory in Texas.
