With Tesla reliant on China for about a third of its earnings, Trump’s proposed 60 per cent tariff on China’s exports to the US, which would draw a strong response from China might also have been expected to play on Musk’s mind. China also happens to control most of the supply chain for EV batteries.
Tesla’s big exposures within China make it vulnerable to any government or Chinese consumer backlash in response to a full-on trade war with the US.
Tesla shareholders, who re-approved Musk’s $US56 billion pay package this year after a court had earlier voided it, might be expected to be concerned that he is aligning himself so closely with someone whose policies are so potentially inimical to their company’s interests.
As Musk himself said to Tucker Carlson this month: “If [Trump] loses, I’m f—ed.”
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Tesla, already embroiled in disputes and investigations involving a number of US government agencies, couldn’t expect any favours from a Harris administration.
Those disputes with the government aren’t confined to Tesla, which has found itself investigated for making misleading claims to consumers and over a number of fatal crashes of its semi-autonomous vehicles. Other Musk-related companies, notably SpaceX, X and Neuralink, have also had run-ins with a range of agencies, as has Musk.
Musk may believe a Trump administration, with deregulation as a priority, might rid him of those meddlesome agencies. He might also prefer Trump’s tax cuts for companies and the wealthy to Harris’ plan to tax both a lot more.
His shareholders might also be wondering why, given he already oversees six significant companies, he is so enthusiastic about heading up a government efficiency commission if Trump wins.
Trump has embraced Musk’s idea of creating a commission that would identify ways to slash government spending.
Musk has said – he repeated the claim at Madison Square Garden – that he could cut $US2 trillion from the US federal budget.
Given that the US government spent $US6.75 trillion last financial year, that’s an ambitious prediction. With more than $US5 trillion of that related to social welfare, healthcare and veterans benefits programs, and another $US845 billion for defence spending, it is also an improbable one.
While Trump has said he could cut spending by “impounding” funding approved by Congress – refusing to spend the funds – there are legal constraints on his ability to do so and, in any event, there would be a revolt from both of the major parties if the flows of approved spending within their electorates were heavily cut.
Just as Musk’s highly visible support for Trump may raise some conflicts with the best interests of his companies and their shareholders, the leading role in the proposed efficiency commission would create far more direct ones.
Musk’s companies are within regulated areas of the US economy and receive massive financial assistance from the US government.
A recent New York Times investigation said that his companies were awarded nearly 100 contracts, worth about $US3 billion, by 17 different federal government agencies this year alone. Tesla and SpaceX had been awarded contracts totalling at least $US15.4 billion over the past decade, the Times said.
Tesla’s big exposures within China make it vulnerable to any government or Chinese consumer backlash.Credit: AP
Putting Musk in charge of a body tasked with carving into federal spending while his companies are beneficiaries of massive amounts of government funds and he, personally and in his corporate roles, has been engaged in numerous disputes with federal agencies, would create endless conflicts of interest.
SpaceX, for instance, has railed against a requirement to obtain permits to discharge potentially contaminated water from its launch site in Texas.
It has also clashed with the Federal Communications Commission, which regulates the satellites it launches, after the FCC withdrew nearly $US900 million of proposed federal funding for SpaceX’s Starlink business that would have delivered internet access to rural areas.
Musk has said SpaceX’s ambition of sending humans to Mars could be achieved sooner if it wasn’t “smothered by bureaucracy”. He’s no fan of regulation.
In the case of Tesla, its EVs are only semi-autonomous, with drivers having to keep their hands on the steering wheel at all times. Competitors like Google’s Waymo already have fleets of driverless fleets operating within US cities.
Musk has said he expected to have fully autonomous vehicles available sometime next year, but after a series of crashes involving Tesla vehicles including a recent fatality, the US National Highway Traffic Safety Administration is investigating whether Tesla’s Full Self-Driving technology is defective.
With fully autonomous, driverless robotaxis the key to Tesla’s future and its current $US833 billion market capitalisation, tearing up regulation and slashing the budgets of agencies that supervise and regulate his businesses could be transformative, and lucrative.
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If Harris were to win, however, his campaigning for Trump and his proposed assault on federal government spending might well create an even more intrusive and costly regulatory environment for Musk and his companies.
As Musk suggested so colourfully, if Trump loses, he probably does too, along with the companies he’s so closely associated with.
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