Elon Musk is growing close to the man who wants to throttle his business.
Musk and former President Donald Trump now talk on the phone a few times a month, and the Tesla CEO may become one of Trump’s advisers if he wins reelection, The Wall Street Journal reported last week. But it would be hard for Musk to find another politician — let alone presidential candidate — so focused on eliminating the clean energy subsidies that have benefited Tesla more than any other automaker.
For months, Trump has devoted a portion of his speech at virtually all of his political rallies to attacks on electric vehicles, making false claims about their functionality and using them as a proxy to attack President Joe Biden’s climate policy. At a rally last month in Wisconsin, Trump directly attacked the EV subsidies that have benefited Tesla, saying Biden “is spending hundreds of billions of dollars to give $7,500 tax credits to rich people who buy electric cars.”
“Well, I like Elon, but the car … I’m all for them if you want to go to the candy store, buy yourself a little candy and come back home,” Trump said. “But if you want to take a trip to a place like Mar-a-Lago to say hello to me, you better get yourself a different mode of transportation.”
Musk and Trump have bonded over their mutual distaste for Biden and illegal immigration, according to The Wall Street Journal. The paper reported that Musk could advise Trump on border security, the economy and a “data-driven project to prevent voter fraud,” echoing Trump’s 2020 election conspiracy theories.
The Trump campaign declined to comment on the former president’s relationship with Musk, saying only that Trump “will be the only voice of what role an individual plays in his presidency.”
“But it has been widely reported and is demonstrated in a number of ways, that many of the nation’s most important leaders in technology and innovation are concerned with the damage done to their industry by Biden’s failures to handle our economy and his moves to overburden innovators with government bureaucracy and unrelenting regulation,” Trump campaign senior adviser Brian Hughes wrote in a statement to E&E News.
The newly kindled relationship between Musk and Trump comes at a pivotal time for Tesla.
The company has done more than any other automaker to define the modern electric vehicle market. But Tesla’s market share is now plummeting amid more competition.
Other EV automakers, including BMW, KIA and Hyundai, are eating into Tesla’s profits and seeing double-digit growth in sales. And that competition will only expand, as more automakers are rolling out an entire new fleet of cheaper EVs for under $30,000 that will lead to more rapid development, according to Stephanie Valdez Streaty, director of industry insights at Cox Automotive.
“Tesla has been around for a long time, they have that brand, they have the infrastructure,” she said. “But now they have all this competition just right behind them, breathing down their neck, with all this new product that has range and has infrastructure access.”
Still, President Joe Biden’s climate policies have enormously benefited Tesla, which sells a solar roof product in addition to EVs and energy storage. One of the most generous provisions of the Inflation Reduction Act, signed into law by Biden in August 2020, grants $7,500 to some EV customers.
Tesla has more vehicles qualifying for the subsidy than its competitors. There is no analysis tracking the total dollar amount of customer EV subsidies by automakers, but Tesla’s sales volume ensures it benefits more from the provision than any other car company.
Tesla’s Model Y is the best-selling EV in the country, accounting for about a third of all EV sales last year, according to Kelley Blue Book. Tesla’s Model 3 is the second-best selling EV in the country and the Model X is the ninth, though not all versions of those models qualify for the deduction this year.
Then there are the electric vehicle battery production tax credits that Tesla and Panasonic — its partner in the operation — have received from the IRA, which totaled $1.8 billion last year alone, according to Benchmark Mineral Intelligence, a consultancy firm.
Tesla did not respond to a request for comment. But Trump’s possible second term in the White House, with his promise of cutting EV subsidies, would come at a time when the company is in a more precarious position than it has been for years.
In the past year, the company’s share of the EV market dropped to 51 percent, down from 62 percent early last year. Tesla has responded by cutting more than 10 percent of its staff, including from its profitable charging station division.
Tesla is now in a “code red” situation, according to Dan Ives, an analyst with Wedbush, a financial services firm. After Tesla posted its first quarter sales numbers, which were down 13.3 percent compared with last year at the same time, Ives wrote in a note to investors that the narrative around Tesla “is as negative as we have seen in the last few years.”
“But unlike other times, now it’s warranted as growth has been sluggish and margins showing compression with China a nightmare,” he wrote. “For Musk, this is a fork in the road time to get Tesla through this turbulent period; otherwise, darker days could be ahead.”
Then there are Musk’s politics, which are increasingly far-right and conspiratorial and blasted out daily to his 186 million followers on X, the social media platform formerly known as Twitter that Musk renamed after he bought it. He has also repeatedly shared the Great Replacement theory espoused by White nationalists, which falsely claims Democrats are importing undocumented immigrants into the country to win elections.
But the vast majority of potential EV buyers, or 70 percent, are Democrats, according to a Pew Research Poll conducted last year. Just 20 percent of Republicans are interested in buying an EV.
Biden campaign spokesman James Singer said the president has “been standing up to people like Elon and fighting for the middle class his entire career.”
“Despite what Donald Trump thinks, America is not for sale to billionaires, oil and gas executives, or even Elon Musk,” he said. “Trump is selling out America to pay his legal bills and put himself in power, while all billionaires like Elon see is a sucker: They know if they cut him campaign checks, he’ll cut their taxes while he cuts Social Security and other benefits for the middle class.”
This story also appears in Energywire.
