On Sunday, US President Biden officially announced his decision not to seek re-election and instead support Vice President Harris's candidacy. Due to falling behind in many critical swing states, Biden faced immense pressure within the party, and his withdrawal from the race was not unexpected. His opponent, Trump, sees this as a major victory and believes that it will be easier to defeat Harris.
Although there are still three and a half months until the election, society both in the US and internationally are beginning to accept a reality: the likelihood of a second term for Trump is increasing. Every industry must begin to study what policy changes this President, who is known for his unpredictable actions, may bring.
This time, Musk played a role similar to Peter Thiel's during the 2016 election and publicly supported Trump's election. Compared to Thiel, who was forced to leave Silicon Valley after becoming the "enemy of Silicon Valley," Musk has already left California in advance and has also moved the headquarters of Tesla, SpaceX, and X to Texas.
Publicly supporting Trump.
Musk publicly supported Trump after the assassination attempt on him. On July 13th, former President Trump was shot at a political rally in Pennsylvania. After a few gunshots, someone fell after being shot, and blood flowed from Trump's ear, but fortunately he escaped. Before leaving under the protection of Secret Service personnel, Trump also did not forget to fist-pump and shout "Fight!" to the audience, leaving behind a classic photo.
Less than half an hour later, the world's richest person, Musk, forwarded the video of the scene on his X platform and announced, "I completely endorse President Trump and wish him a speedy recovery." Although he had already moved closer to the Republican Party, this was Musk's first public endorsement and announcement of support for Trump's election as President. Perhaps this was the most appropriate time for him to take a position, as the assassination attempt could directly affect this year's election outcome.
A few days later, the Wall Street Journal broke the news that Musk planned to donate $45 million each month to the Super PAC that supports Trump, in order to help the latter enter the White House. This means that Musk is going to become the largest super donor in US history, donating $0.18 billion before the election.
Although Musk later publicly responded that this was fake news, he did not clarify how much he would donate and continued to fan the flames by retweeting another tweet that said, "Musk went from being an Obama supporter to wanting to donate $0.18 billion to Trump. The extreme left is done." and replied "Yeah," making the news more real than not.
Musk is not only the richest person in the world, but also the most influential business and technology leader in the US. Getting his public endorsement will help attract more business elites and neutral voters, and is of great significance to Trump's campaign. Trump also thanked Musk publicly, "I love Musk. He's a smart guy. Every time I call him, he's talking about rockets. My relationship with him has always been good."
The two previously had not had a good relationship. Since Musk once supported Florida Governor DeSantis, a Republican, to run for President, Trump has publicly humiliated Musk, "He came to the White House asking for government subsidies for his projects, be it electric cars that won't run for long or self-driving vehicles that will crash, or rockets that can't go anywhere without government subsidies. Without subsidies, he's worth zero. When he told me that he's my fan and a Republican, I should have said,"Kneel down and beg me," and he would have done the same."
After Musk announced that SpaceX and X (formerly Twitter) headquarters would leave California, Governor Newsom posted a screenshot of Trump's humiliation of Musk and mocked Musk for "really kneeling" to Trump. Musk responded in defiance, "You never stood up to begin with." The two's previously good relationship no longer exists, and it appears that Musk has completely broken with California.
Why did Musk shift to the Republican Party?
Musk claims that he has been voting for the Democratic Party and voted for Biden in 2020, but he has been in conflict with Democratic presidents and politicians over the past few years, and his political stance has gradually shifted towards the right, until he fully supports the Republican Party and then supports Trump's election. So why did Musk shift from being a Democratic Party supporter to the Republican Party?
In terms of political stance, Musk and Peter Thiel do not belong to traditional Democrats or Republicans. They are both typical libertarians who advocate for small government, less regulation, and personal freedom. In the current political spectrum of the United States, libertarians and Republicans have more intersections on the issue of "small government and low taxes."
This is the main reason Musk and Thiel are opposed to the Democratic Party, as they both oppose big government, strict regulation, and high taxes because they don't serve their actual interests. They hope that Trump can reduce regulation, and his tax reduction program is more in line with their interests as billionaires.
In the past few years, the relationship between Musk and the Biden administration has been very bad, with many exchanges over the air. Due to the need to win union votes, Biden's electric vehicle development plan almost exclusively focuses on Detroit's three top automakers, ignoring Tesla that resists unions, and has never even visited Tesla or invited Musk to electric vehicle industry summits.
On the issue of the wealth tax proposed by the Democratic Party, Musk and other super-rich people such as Bezos have a consistent position. Their huge fortunes are almost all in stocks, and they do not need to pay taxes if they do not sell them. However, the Democratic Party plans to levy taxes on the increase in their stock values, which touches on the deep interests of the super-rich. As the world's new richest person, Musk has had many heated debates with Democratic congressmen such as Warren on this issue.
The conflict between Musk and the Democratic Party's governing philosophy is mainly reflected in the liberal stronghold of California. Because of dissatisfaction with California's government regulations and epidemic control policies, Musk decided to move Tesla's headquarters to Texas, a state with less regulation. California's high taxes also directly caused him to sell out his mansions in California and move to Texas, where he can save at least billions of dollars in taxes in the future.
Of course, Musk's own values are also an important reason. When Tesla needed support and subsidies from the Democratic government, Musk rarely publicly criticized Democratic policies. But as Tesla became a global electric vehicle industry giant and Musk became the world's richest person, he became increasingly unreserved in expressing his true thoughts.
Musk has expressed that it is the Democratic Party's gradual leftist lean that has made him appear more right-wing. He is out of sync with the current mainstream radical left on social issues such as transgender, illegal immigration, and free speech. Just last week, he also publicly criticized California's school transgender bill, saying that it would force parents to leave California to protect their children.
Join hands to fight climate change.
Although Musk opposed Trump's candidacy, which resulted in Trump publicly humiliating him, their relationship gradually eased as Trump won the Republican primaries. Earlier this year, at the mediation of Florida's wealthiest Republican, billionaire Nelson Peltz, the two met at Peltz's home, reconciled, and discussed many policy topics.
Musk, who is extremely controlling, has a great political betting opportunity. If he successfully helps Trump to win, he can become an advisor to the latter's government, directly affecting many industrial and social policies of the White House, and even more influential than Till in 2016. Musk will never feel this kind of importance under the Biden administration that ignores him.
In fact, Musk has already begun to influence Trump. According to reports by American media, Musk, Till, and American right-wing media person Carlson played an important role in Trump's selection of Ohio federal senator Vance as his deputy. Vance has a close relationship with Till, and both come from the venture capital industry. During Vance's campaign for federal senator in 2022, Till made a political donation of up to $10 million.
However, an undeniable awkward fact is that the Tesla vision that Musk admires so much of 'pushing the world towards sustainable energy' is in clear conflict with the energy policy positions of the Republican Party and Trump, who oppose climate change. After taking office, Trump ordered the United States to withdraw from the Paris climate agreement, vigorously develop traditional energy such as oil and natural gas, and revoked the federal government's $7,500 tax rebate for purchasing electric vehicles.
It is well known that the Republican Party's opposition to climate change has practical reasons. The traditional fossil energy industry is the main political sponsor of the Republican Party, and states with abundant traditional energy reserves are almost all Republican red states. Reducing the development of traditional energy will affect the interests of the Republican Party's sponsors, and will also undermine their basic support.
It is hard to imagine that Musk, who is most enthusiastic about electric vehicles and sustainable energy, would actually stand together with the Republican Party, which opposes climate change and advocates fossil energy. When Musk was furious at Gates for shorting Tesla, he proudly declared that Tesla was 'the company that contributes the most to global climate change', and that opposing Tesla was opposing climate change.
Comprehensive revocation of electric vehicle policies.
In his acceptance speech at the Republican National Convention, Trump clearly stated that he would repeal Biden's EV mandate on his first day in office and accused the Democratic Party of subsidizing electric vehicles at the expense of sacrificing American manufacturing job opportunities. His presidency will undoubtedly have a major impact on the growth prospects of electric vehicles in the United States.
Jon McNeill, a director of General Motors and former global sales director of Tesla, said that if the United States cancels its electric vehicle industry policy, it will only make the gap between the United States and China in electric vehicles increasingly large and even lose the future of the automobile industry.
So, if Trump takes office, which specific electric vehicle industry policies of the Biden administration will he abolish?
The first to be canceled is the Biden administration's electric vehicle purchase subsidy. Now buying many electric vehicles in the United States, including Tesla Model 3 and Model Y, can enjoy up to $7,500 in subsidies. Even used electric vehicles can enjoy a $4,000 tax refund. But after Trump took office, none of these will be available.
Dylan Khoo, an electric vehicle industry expert at industry think tank ABI Research, also believes that revoking electric vehicle purchase subsidies will make consumers less willing to buy electric vehicles, because the high price of electric vehicles is already an important obstacle to the popularization of electric vehicles in the United States. Even Trump himself, when it comes to electric vehicles, says "the price is too high and difficult to popularize."
Secondly, the Biden administration's new car emission reduction plan may also be ruthlessly abolished by Trump. In March of this year, the EPA issued emission standards that require light passenger vehicles to reduce greenhouse gases such as carbon dioxide and air pollutants by half compared to current standards by 2032, thereby achieving a standard where more than half of electric vehicles are used. This policy was previously opposed by Republicans.
Thirdly, Biden's electric vehicle infrastructure investment plan will also be canceled by Trump. The Biden administration proposed a NEVI (National EVI) program in 2021, which invests $7.5 billion for five years in a special plan to build charging infrastructure across the United States, with plans to establish 0.5 million charging stations in the United States, achieving 1 charging station every 80 kilometers to encourage more Americans to buy electric vehicles. Currently, 70% of the charging piles in the United States have been installed in the last three years, which is also the main achievement of the Biden administration in promoting electric vehicles.
The lack of charging facilities is already one of the biggest obstacles to the popularization of electric vehicles in the United States. A survey of electric vehicle popularization conducted by the Associated Press and the University of Chicago last year showed that as many as 80% of respondents said that mileage anxiety caused by the lack of a public charging network in the United States is the main reason preventing them from buying electric vehicles.
However, after three years, there are currently only 0.183 million public charging piles in the United States. Moreover, two-thirds of the fast charging piles come from Tesla. Once Trump takes office and cancels the infrastructure investment for charging, without the support of federal government funds, the pace of construction of the charging network in the United States will only slow down further.
Musk doesn't care about subsidies
However, it seems that Musk is not worried about Trump's revocation of electric vehicle industry policies. He publicly stated on X that revoking subsidies will only help Tesla, and he suggests canceling subsidies for all industries.
Perhaps Tesla doesn't need government subsidies now. But Musk may have forgotten that before becoming a global electric vehicle giant, Tesla also enjoyed many industry support and subsidy policies from the United States government and the California government to develop and grow.
At the end of 2008, Tesla suffered serious funding problems, and Model S could not be launched in a timely manner due to production capacity problems. The company maintained a rapid burn rate. Musk had to seek financing everywhere to avoid bankruptcy, including introducing a $50 million investment from Daimler-Benz.
When Musk was most worried, he received a low-interest loan of $0.465 billion from the US government in June 2009. This lifeline loan came from the Advanced Technology Vehicle Manufacturing Loan Program (ATVM) launched by the Bush administration earlier to encourage the development of new energy vehicles. Musk later admitted that "without this loan, Tesla could not have gone public smoothly."
In addition, Tesla has also enjoyed the $7,500 tax rebate for electric vehicles from the Obama administration for many years, plus a $2,500 subsidy from the California government, which is equivalent to a direct reduction of up to $100,000 for California consumers to purchase Tesla.
It is also undeniable that the zero-emission credit trading mechanism of the California government is the most important source of profit for Tesla when it continues to lose money. According to the regulations of the California government, for every electric vehicle sold, Tesla can sell zero-emission credits to traditional car companies to generate revenue. In the first quarter of 2013, Tesla made a profit for the first time after going public, with a profit of $11.2 million, including a revenue contribution of $68 million from zero-emission credits.
After Musk gradually approached the Republican Party and his relationship with California cooled, Tesla's sales in California also changed significantly. In the second quarter of this year, electric vehicle sales in California fell by 1.3%, but Tesla's sales fell sharply by 24% year-on-year, the third consecutive quarter of sales decline. In the first half of this year, Tesla's sales in California fell by 17% year-on-year, and its market share in California's electric vehicle market also fell from 64.6% to 53.4%.
California is the largest electric vehicle market in the United States and Tesla's largest market, where sales account for 10% of Tesla's global sales. Texas, where Tesla's new headquarters is located, still does not allow Tesla stores to sell directly. Texas law requires cars to be sold only through 4S stores, and consumers can only go to the store to test drive and then place an order to buy Tesla online.
Revoking subsidies is a bullish sign for Tesla.
At last month's Tesla shareholder meeting, Musk appeared to be in a good mood when asked about Trump's attitude towards electric cars. He often discusses electric cars with Trump, many of Trump's friends also drive Teslas, and Trump loves Tesla's Cybertruck.
After getting Musk's endorsement, Trump also changed his strong resistance to electric cars. In an interview with the media, he said, 'I have no problem with electric cars. I often drive electric cars and think they're great. Musk is very outstanding. But you can't make all cars electric. We can't electrify all American cities.'
This is a significant departure from his previous stance. Previously, Trump publicly stated that he was not interested in electric cars and that they were not suitable for popularization due to charging and range issues. Now, Trump only plans to cancel all industrial support policies, but will not publicly oppose electric cars.
This self-destructive industrial policy may only benefit Tesla. Dan Ives, a well-known analyst at Wedbush Securities, wrote in an industry report that Trump's rise to power is a big negative for the US electric car industry, but it may be bullish for Tesla.
"Tesla has a scale that the electric car industry cannot reach, and this advantage can help Musk and Tesla enjoy significant competitive advantages in an environment without electric car subsidies."
Dylan Khoo, an electric car industry expert at the industry think tank ABI Research, holds the same view. He believes that Tesla has enough market share and scale advantages to withstand the government's withdrawal of subsidies, while their competitors cannot. 'All subsidies are to help other companies get through the (loss-making) period of transitioning to electric cars, and Tesla has been developing for 15 years, achieving profitability in making electric cars.'
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