Musk has claimed benefits under the legislation which has been enacted by the Biden administration. But he has extended his support to Trump.Entrepreneur Elon Musk has extended his support to former US President Donald Trump who is also the Republican party’s presidential nominee. The former president has said that he is against Electric Vehicles (EV) and has also announced to end most of the tax breaks and subsidies for the industry. Musk who is also the CEO of EV manufacturer Tesla has extended his support to the former president under such circumstances.
Is it not obvious that Musk stands to lose because of any potential policy change being enforced by Trump? The question then is that why is he supporting him? The Business Insider has reported that there may be a highly selfish reason for this decision.
The former president has called the issue of climate change a hoax. He has said that he intends to produce more fuel obtained from fossil fuels. In the first year of presidency, he had even pulled out of the Paris Agreement. He has announced that he will be reducing all forms of subsidies provided by the US Government as per the Inflation Reduction Act to various companies focusing on climate mitigation methods, including the manufacturers of EV Vehicles. This will prove to be disastrous for Tesla.
Musk has claimed benefits under the legislation which has been enacted by the Biden administration. But he has extended his support to Trump. Further, the company’s Q2 revenue growth has not been as per expectations. The upcoming Trump’s presidency will only add to the regulatory risks of the company and potential challenges to the company.
Musk’s decision may be associated with purely business reasons. He may want lesser competition from well-known automobile companies including General Motors and Ford. Any reduction in the subsidies may impact the fortunes of these companies.
Further, as China launched low-cost EV models, there are reports that the Chinese are using the US-Mexico-Canada Trade Agreement to carry out trade malpractices. Many newspaper reports have emerged that the Chinese are setting up factories in Mexico and exporting cheap EV vehicles to the US. Trump’s position on China and trade is clear. His commitment to levying tariffs on import of EV vehicles and Chinese products may help Musk in his competition against China.
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