All the possible reasons — some logical, some not — Elon Musk might want to donate US$180 million to Trump’s re-election
Both are strict authoritarians, Trump eyeing democracy almost as suspiciously as Vladimir Putin; while Musk treats supposedly independent corporate entities as personal fiefdoms. Both have contentious records with employees. Both can’t stop saying stupid things on social media. And, as perhaps the biggest proof of shared DNA, both claim to value loyalty, though, as practised, their concept of fealty would appear to be uni-directional. Indeed, publicly, the main differentiator in their personas would seem to be that one loudly trumpets a disdain for cars with batteries while the other professes to want to sell them.
This last makes the Wall Street Journal’s revelation that Musk is financing the ex-president’s re-election to the tune of US$180 million counter-productive at best, and just plain strange at worst. It is a contradiction that has, in fact, got analysts so tied up in epistemological knots that one must wonder if it might be some frat-boy prank to screw with the mainstream media.
It is, however, one thing to profess you’ll do relatively better in harsher business conditions, quite another to pretend that you’ll actually sell more cars with fewer incentives. Tesla may indeed be less affected by the loss of government largess, but it would seem a pretty big leap of logic to believe Tesla is going to sell more cars with fewer government rebates available. If that is Musk’s philosophy, perhaps he needs a new risk assessment officer.
Besides, America’s once-and-future president is already on record saying he’s going to scrap EV subsidization. His prospective VP, J.D. Vance, is even more vehemently opposed to tax credits for those buying electric vehicles. Why would Musk, even if he truly believes the end of incentives are a benefit to Tesla, spend US$180 million to convince his new bro of that which he has already promised to enact? It makes no sense.
Nor do the arguments that Musk is trying to influence Trump to make further tax cuts, both corporate and personal. Again, the former-and-future-most-powerful-man-in-the-world is already on record as promising just that; why spend money on that which is offered gratis? Likewise, those claiming Musk is trying to ensure Trump’s re-election are missing out on the fact the reason Kamala Harris has been nominated unopposed is not because she is electable, but that all those who are electable realize that a Democratic presidency in 2025 is a losing cause. So again, money wasted.
But what’s the end game? Oh, for Trump, the benefit is obvious. Votes from Musk’s followers — more than two-thirds of Tesla owners are what The Information calls “coastal liberals” — would be a nice ‘swing’ at the polls come November. And Lord Elon does have a huge platform — the 200-million-plus users that still log on to X-cum-Twitter — that he has been using lately as a potent anti-woke megaphone.
But what does Musk get? A hand-picked pit bull of a VP — whom Musk, for some reason, seems to have recommended to Trump — who is on record promoting that it’s gas-powered cars that should be subsidized, not EVs? A base which, while they might appreciate his freedom-of-speech trolling, are no more likely to buy a Cybertruck just ’cause he’s toadying up to the Big Guy?
So, if decreasing incentives and getting an anti-EV pit bull of a VP aren’t the impetus for Musk’s recent munificence, what is?
It is one thing to profess you’ll do relatively better in harsher business conditions, quite another to pretend that you’ll actually sell more cars with fewer incentives
There might be a chance he’s trying to save at least some portion of the Inflation Reduction Act’s (IRA’s) electric-vehicle subsidies. While it’s almost assured the US$7,500 consumer tax credits for EV purchase (clause 30[D] in the IRA) are gone, perhaps he will use his newfound amity to lobby Trump to retain clause 45(X), which promises automakers a whopping US$45 per kilowatt-hour for every battery they manufacture in the United States from now until 2032.
According to most estimates — including Motor Mouth’s — 45(X) pays as much as US$1 billion per battery plant per year for any facility building EV batteries on U.S. soil. So perhaps those 180 million dollars are an attempt to thread the proverbial subsidy needle: convince Trump to scrap the consumer incentives he thinks Tesla can survive without, but keep those manufacturing monies flowing right to Tesla’s bottom line.
Another long shot — and the one I’m betting on — is that Musk is concerned about the possible loss of emissions credits. Essentially, any legacy automaker not selling enough electric vehicles to reach obligations under California’s emissions rules — and those of the 13 states that emulate the Golden State’s regs — can offset them by buying credits from EV manufacturers with a surplus of sales. The most convenient source of those credits is Tesla, mainly because it sells more EVs than anyone else, and therefore has the most credits to sell.
The revenue from these regulatory credit sales is truly a win-win for Tesla. Not only is every dollar other manufacturers send Tesla’s way money that can be used to reduce the price of, say, a Model Y without affecting its per-vehicle margins, it’s also a dollar those automakers can’t use for the research and development needed to catch up with Tesla. In 2023 alone, Tesla’s take was a whopping US$1.79 billion, and, according to a recent analysis by Electrek, more than half of the company’s Q2 2024 profits “came from selling emission credits.” In other words, keeping this credit gravy train going is one hell of a motive to stay on Trump’s good side.
His donations to Trump might well just be a very public — and expensive! — signal that he’s really checking out. Or it could be his way to subconsciously force the issue. Either way, Tesla has officially paused construction of its much-ballyhooed Gigafactory Mexico battery plant as a result of dwindling sales and Trump’s promise to slap tariffs on vehicles imported from Mexico.
Of course, Musk now claims none of this is true, which would seem to put him in a difficult position. Stick with his (supposed) promise and he alienates two-thirds of his clientele. Welsh on that — again, supposed — pledge, and he risks the ire of the once and future most powerful man on the planet. Musk might be best advised to keep better control of his own counsel from now on.
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