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Over the last stretch of
Donald Trump's candidacy for
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president. No one was a
bigger cheerleader for him
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than Elon Musk.
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Ahhh, America's just not not
just going to be great.
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America is going to reach
heights that it has never seen
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before. The future is going
to be amazing!
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Aside from stumping for Trump
on the campaign trail for
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weeks, the tech magnate also
poured millions into Trump's
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election campaign. Musk also
used his social media company
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X as a pulpit to promote his
preferred candidate, often
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with claims that were untrue.
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It's still a very powerful
platform.
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It's still the platform many
celebrities and politicians
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and so many people use to
make official announcements
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and talk directly to people.
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So it is a real hub and
source of news.
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And he basically turned that
into Trump's favor.
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The admiration went both ways.
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Here is Donald Trump praising
Musk during his speech
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declaring victory in the 2024
presidential election.
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We have a new star.
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A star is born.
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Elon.
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Trump's imminent presidency is
paying off for Musk, who is
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already the richest man in
the world, even before Trump
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steps into the White House on
January 20th.
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In the week after the
election was called for Donald
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Trump, Tesla stock surged,
with shares of the company
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reaching their highest level
since 2022.
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The company's market
capitalization is now over $1
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trillion.
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A lot of analysts are going to
look at the Trump presidency
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as a very positive thing for
Tesla, because they just see
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Musk's influence over the
incoming administration can
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streamline things that Tesla
wants permission to do.
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With the election of Donald
Trump to a second presidential
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term, and the appointment of
Elon Musk as the head of a new
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government efficiency
commission known as DOGE, CNBC
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wanted to learn how Musk and
his myriad of companies may
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benefit from having the ear
of the president.
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Elon Musk's business empire is
sprawling and includes EV
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maker Tesla, social media
company X, artificial
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intelligence startup xAI,
computer interface company
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Neuralink, tunneling venture
Boring Company and aerospace
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firm SpaceX. Some of these
companies already benefit
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tremendously from federal
contracts.
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SpaceX has already earned more
than $19 billion from its
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prime contracts with the
government. Most of that
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business is coming from
contracts with NASA and the
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Department of Defense,
including like Space Force,
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Air Force and others.
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Sometimes it's NOAA, but the
federal government in the US
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is very, very reliant on
SpaceX to go ahead with its
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launches to put new
satellites up for their
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various purposes, be it
defense, be it environmental
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and communications.
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Abroad the U.S. government has
been paying SpaceX millions to
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make its Starlink satellite
internet available in Ukraine.
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The company is also working
on a military version of
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Starlink called Starshield
for the Department of Defense.
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This vast reliance on SpaceX
has caused some of SpaceX's
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rivals to object.
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In 2021, Jeff Bezos' Blue
Origin sued and eventually
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lost a case where the company
argued that NASA had unfairly
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chosen SpaceX as the sole
winner of a contract to
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develop a lunar lander for
NASA's Artemis missions.
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NASA has since also
contracted with Blue Origin
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for the task. Still, with a
favorable president on his
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side, it's not hard to
imagine Elon Musk's SpaceX
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winning even more of these
lucrative government contracts
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in the future.
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As the concerns about a
monopolistic relationship grow
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within that federal
government.
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Trump isn't likely to slow it
down.
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SpaceX is likely to earn out
more than $5 billion a year
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over the next several years
from federal contracts they've
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already kind of got locked
down, and that could even
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grow.
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During his victory speech,
Trump marveled at SpaceX's
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ability to retrieve the
rocket booster of its massive
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Starship rocket and praised
Musk for delivering Starlink
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Wi-Fi terminals to North
Carolina following Hurricane
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Helene.
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It was very dangerous.
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People would die. They had no
communication.
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All the wires were down.
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I called Elon Musk.
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I said, Elon, you have
something called Starlink.
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Is that right? Yes I do.
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What the hell is it? He said
it's a communication system.
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That's very good. I said,
Elon, they need it really,
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really badly in North
Carolina.
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Can you get it? He had that
there so fast.
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It was incredible.
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Tesla has also benefited
greatly from government
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support, mostly by taking
advantage of existing EV
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policies like automotive
regulatory credits, which are
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issued to companies that make
low carbon or no carbon
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emission vehicles.
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Regulatory credits made up
about 60% of Tesla's net
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income in the second quarter
of 2024, and about 39% in the
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third quarter. In total, the
company has reported about $10
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billion in sales of
environmental credits since
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2015. While Trump has often
promised to dismantle existing
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green energy subsidies and
programs, he may not have the
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authority to singlehandedly
dismantle carbon credits, as
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many carbon credit markets
are state run.
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In addition, many clean
energy projects enjoy
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bipartisan support.
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80% of the funding from the
president's signature bills,
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the Inflation Reduction Act
and the Bipartisan
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Infrastructure Law have gone
to red districts, districts
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represented by Republicans.
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It would be political
malpractice to undo those
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opportunities.
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Where Trump may have more
power is nixing electric
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vehicle tax credits offered
to those who purchase EVs, and
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eliminating grants for the
build out of electric vehicle
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charging, which Tesla has
also benefited from.
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In a post on X in July, Musk
was adamant that Tesla doesn't
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need subsidies and that
removing them would only help
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the company. Some industry
insiders agree.
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At the end of the day, Tesla
is the best position versus
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all the automakers, including
the legacy automakers on EVs.
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You know, they they have the
biggest scale.
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They have the lowest cost.
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They have the highest margins
to withstand an environment
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where, let's say, Trump pulls
a majority of the incentives.
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Musk and Tesla are now focused
on autonomy and bringing
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robotaxis to market, a goal
that still seems years away.
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Tesla is still really
grappling with development of
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that technology. They have
never made a vehicle that's
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safe to drive without a human
at the wheel ready to steer or
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brake at all times in an
uncontrolled environment like
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the public roads.
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The Trump team is reportedly
planning to prioritize federal
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regulations around
self-driving vehicles in the
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U.S., which would be a boon
for Tesla.
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Trump did make it official
late last night that Elon Musk
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and Vivek Ramaswamy will
co-lead what he's calling the
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Department of Government
Efficiency.
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Trump said that their goal
will be to and this is a
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direct quote here 'dismantle
government bureaucracy, slash
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excess regulations, cut
wasteful expenditures, and
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restructure federal
agencies.' Now, guys, many
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questions about how exactly
any of that would work.
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Starting with that, the
president elect cannot just
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create a new agency without
Congress, which approves all
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spending. But Trump did say a
little bit in his statement
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announcing it that Musk and
Ramaswamy will work from
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outside of government in
partnership with the Office of
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Management and Budget.
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That setup will not require
either one of them to divest
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anything, to pass a
background check or to get
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Senate confirmation.
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Even as an advisor, the
position could be a powerful
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boost to Musk's business
interests.
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The number one way Elon Musk
and his companies would
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benefit from a Trump
administration is through
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deregulation and defanging,
giving fewer resources to
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federal agencies tasked with
oversight of him and his
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businesses.
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As head of the Government
Efficiency Commission, Musk
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has said that he plans to
shave off a significant amount
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of dollars from the federal
budget.
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We set up DOGE. Yes.
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How much do you think we can
rip out of this wasted $6.5
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trillion Harris Biden budget?
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Well, I think we can do at
least 2 trillion.
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Yeah.
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For context, in 2023, the
federal government budget was
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$6.1 trillion, with the
largest chunks of the budget
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going to entitlement programs
including Social Security,
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Medicare and Medicaid.
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On X, Musk suggests that one
way to rein in the budget is
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to get rid of the fraud
affecting some government
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programs. Data from the
Government Accountability
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Office shows that the federal
government lost an estimated
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$233 to $521 billion annually
due to fraud between 2018 and
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2022. Musk has also suggested
that he will consolidate some
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of the country's over 400
federal agencies.
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I think there's something like
428 federal agencies.
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That's almost two agencies
per year since the founding of
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the country and more being
created.
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And so I call this like a
sort of strangulation by
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overregulation. Um, and this
is crazy.
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In a recent commentary piece
in the Wall Street Journal,
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Musk and Ramaswamy wrote that
DOGE will pursue three major
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kinds of reform regulatory
rescissions, administrative
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reductions, and cost savings.
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The commentary went on to say
that many existing federal
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regulations were never passed
by Congress, and should
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therefore be nullified, which
president elect Trump will be
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able to do by executive
action.
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Meanwhile, cutting
expenditures like the $535
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million a year that goes to
the Corporation for Public
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Broadcasting, $1.5 billion
for grants to international
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organizations and nearly 300
million to groups like Planned
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Parenthood, could deliver
major cost savings, they said.
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The two also championed the
large-scale auditing of
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agencies calling out the
Pentagon for failing its
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seventh consecutive audit.
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Musk here really has the
opportunity to suggest to
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Trump that he makes cuts at
federal agencies that could,
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in effect, directly impact
how he does business.
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That includes the SEC, that
includes the FAA and SpaceX
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launches, kind of cutting the
red tape there, making it
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easier for them to launch
without certain regulations
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and rules, including
environmental protections.
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And then there's the National
Highway Transportation Safety
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Administration. That is a big
barrier for Musk's ambitions
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and robotaxis.
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The agency has been a strict
watchdog when it comes to the
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safety of Tesla's vehicles.
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This is a major recall.
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Tesla is announcing after an
investigation by the National
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Highway Traffic Safety
Administration.
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Tesla is recalling 362,000
vehicles.
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Tesla shares taking a leg
lower late today after the
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National Highway Traffic
Safety Administration found a
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critical safety gap in its
autopilot system.
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Meanwhile, testing standards
for autonomous vehicles are
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done on a state-by-state
basis, something Musk has said
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he would like to be
standardized through a federal
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process and Trump has said he
will support.
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Musk has said that he wants to
get the DOT to instate a
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federal motor vehicle safety
standard.
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That would allow you
basically like a super pass,
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you know. You just meet this
one standard and then you can
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use your robotaxis anywhere
in the country.
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If Tesla can get a favorable
environment around the
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government talking to the
states about making some of
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these full self-driving more
available that can move the
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needle. Just to put some
quick perspective on it.
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Within a few years, there'll
be about 10 million Teslas on
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the road. Half of them get
it, that adds $6 billion in
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their net to their net
income.
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That would increase it by
about 35%.
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This is a huge lever.
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Elon Musk has frequently
blamed government regulation
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for stifling innovation.
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A bonfire of nonsense
regulations would be epic.
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Yeah more lax regulation could
also help Musk's newer
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companies.
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As far as what's going on with
X and Twitter, that piece is
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that there's probably a
benefit just around his
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ability to continue to grow
that platform, just kind of in
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a more free speech type of
world.
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And and lastly, don't forget
about xAI.
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I mean, the whole AI piece,
this potential around some
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regulation around AI that
diminished today.
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And I'm stretched to try to
find out how this could play
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out negative for Elon.
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A weakened regulatory body
might also bolster Musk's
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fight against the numerous
probes and investigations he
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and his companies are facing
from federal agencies.
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There's somewhere in the
ballpark of 19 or 20 federal
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probes and lawsuits involving
Musk and federal agencies.
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There are OSHA investigations
into safety issues at Tesla
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and SpaceX that are open.
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There's an EEOC civil rights
investigation into Tesla.
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They believe that Tesla
allowed racist discrimination
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and retaliation against black
employees to happen for years.
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The labor board is
investigating SpaceX for
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possible alleged retaliation
against employees who spoke
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critically of Musk with this
open letter.
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Additionally, the SEC is
investigating whether Elon and
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his brother have committed
securities fraud.
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The EPA found SpaceX was in
violation of the Clean Water
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Act in Texas, and he was
livid about that, which
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delayed the Starship launches
that he wanted to go forward
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with. And then you've got all
the Department of
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Transportation safety probes.
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There are four open currently
looking into mostly safety
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defects around autopilot,
FSD, and these partially
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automated driving systems
that Tesla's had out on public
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roads. He's hoping that Trump
will, you know, force those
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agencies to wind down and
abandon any probes, charges,
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litigation they were pursuing
against him, against Tesla,
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against SpaceX, and so forth.
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Finally, Trump is also likely
to back Musk's anti-union
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stance. Here's the president
elect speaking to Musk during
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the two hour interview on X
in August.
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Well, you you're the greatest
cutter.
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I mean, I look at what you
do. You walk in and you just
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say you want to quit.
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They go on strike. They.
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I won't mention the name of
the company, but they go on
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strike, and you say, that's
okay.
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You're all gone. You're all
gone.
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So every one of you is gone.
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There was a thought going into
after that big union contract
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was won with UAW following
the strike, that that might
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trickle over and bleed over
into Tesla, that the UAW could
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convince Tesla workers to do
the exact same thing and
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unionize for the first time.
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Now that the election has
been decided in Trump's favor,
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a lot of the gas in that
argument has been taken out.
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Although Trump and Musk align
on a number of strategies,
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it's unclear where Musk
stands on Chinese tariffs
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since he's changed his
position in the past.
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The Chinese car companies are
the most competitive car
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companies in the world.
Frankly, I think if there are
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not trade barriers
established, they will pretty
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much demolish most other car
companies in the world.
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Tesla competes quite well in
the market in China with no
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tariffs and no differential
support.
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Um, so, uh, I in general, I'm
in favor of of no tariffs.
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He's been very easy to
criticize people home and
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abroad except China, which is
his biggest growth market
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outside of the United States.
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Tesla's been producing more
vehicles there.
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And he needs the Chinese
Communist Party to like him.
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One of Tesla's most productive
factories is its Gigafactory
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in Shanghai, where they make
cars and are also planning to
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make megapacks. These energy
storage systems that are for,
00:14:45
you know, utilities or
large-scale operations like
00:14:47
businesses. They, likely
under a Trump administration
00:14:51
won't be able to export those
to the states.
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While tariffs could help
protect Tesla from Chinese
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competitors, such a move
could lead to disruptions to
00:14:59
Tesla's automotive supply
chain.
00:15:00
Though Tesla leads its
competitors in the number of
00:15:02
domestic parts it uses, the
company still relies on some
00:15:05
materials and parts from
China.
00:15:08
And Musk's other companies
could also be affected by
00:15:10
global tariffs.
00:15:11
A huge number of the AI chip
tech that X Corp and xAI are
00:15:17
using right now comes from
Nvidia and Nvidia's major
00:15:22
manufacturing partner, TSMC,
is based in Taiwan.
00:15:25
It's unclear if Trump's
tariffs will apply
00:15:26
specifically to TSMC, which
is already investing in
00:15:29
building out manufacturing
plants in the U.S..
00:15:32
If and when a trade war does
break out again, Musk might
00:15:36
stay out of it. It would
behoove him to continue to
00:15:38
stay out of any kind of
Chinese related politics.
00:15:41
Just like we see at companies
like Apple and CEO Tim Cook
00:15:44
there, they just kind of stay
out of the conversation for
00:15:47
that, for fear of poking the
bear, because they're so
00:15:49
dependent on those Chinese
consumers buying their stuff.
00:15:53
Time will tell how effective
Musk's foray into politics
00:15:55
will be in influencing Trump
and his decisions in the next
00:15:57
administration. But one thing
is for certain, Musk will
00:16:01
remain a businessman above
all.
00:16:03
I find that the best lens for
understanding Elon Musk and
00:16:06
the actions he takes at his
companies has to do with,
00:16:09
like, opportunism.
00:16:10
He takes advantage of
whatever he thinks will make
00:16:13
himself and his companies
wealthier and more successful.
00:16:16
So I don't know how much he
and Trump are truly aligned,
00:16:20
but they're mutually very
useful at this time.
