Why Is Elon Musk Really Embracing Donald Trump?

On Wednesday, during a gathering at Mar-a-Lago attended by some of Donald Trump 's closest associates, a speaker demanded, "Where is the George Soros of the right?" In a scene that an attendee captured on video, Elon Musk , the fifty-three-year-old South African-born billionaire who reportedly spent about a hundred and thirty million dollars to aid Trump's campaign and support other Republicans in competitive races, raised his arm. Amid loud cheers, the speaker declared, "God bless you, Elon. We are so, so grateful."

Musk has claimed publicly that he has never asked Trump for any favors, and that Trump has not offered him any. Despite spreading misinformation on X, his social-media platform, and heavily financing the campaign of someone who plotted an autogolpe, he has also denied being a political extremist. After the Mar-a-Lago video surfaced, Musk wrote on X that he was the " 'George Soros' of the middle." In other words, he has portrayed himself as someone who entered the political arena to make the world a better place.

On Wall Street, there is a more self-serving explanation for Musk's bear hug of Trump . "It's a poker move for the ages," Dan Ives, an analyst at Wedbush Securities who has long been bullish on Tesla's stock, told CNBC. If that's true, the play has already paid off big time. Between Trump's victory on November 5th and the close of trading on Friday, Tesla's stock price went from $251.50 to $320.72. According to Tesla's filings with the Securities and Exchange Commission, Musk owns about 715 million shares, so based on that figure the value of his stake has risen by almost fifty billion dollars. This vast sum dwarfs the millions he spent on Trump's behalf, and even the forty-four billion dollars that he and a group of investors paid for Twitter in 2022, an acquisition that greatly increased his ability to influence the political process. Soros, during his career as a Wall Street speculator, had some big scores, but none of them were anywhere near as monumental as Musk's post-election gains.

The run-up in Tesla's stock reflects investors' conviction that the policies of a second Trump Administration will be favorable to the carmaker. But the presence of Trump in the White House could also have important implications for Musk's other companies, many of which are subject to oversight by federal agencies such as the Federal Trade Commission and the Federal Communications Commission, or which have big contracts with government departments.

For example, SpaceX, Musk's innovative rocket company, has received nearly twenty billion dollars in federal contracts since 2008. It is now a major provider of launches to the International Space Station, and, in 2022, it surpassed Boeing as NASA's second most utilized contractor. SpaceX already stands to receive billions more in the coming years, but a new NASA mission to Mars, say, could open the federal spigot even wider. Trump hasn't said much about that idea publicly, but Musk posted , a couple of weeks ago, "Vote for if you want humanity to make it to Mars!"

Trump's determination to build up the U.S. Space Force that he created in 2019 could send more federal dollars in the direction of SpaceX. In October, the Space Force awarded a $733.6 million contract to Musk's company for space launches. If Trump expands its budget, more contracts could well result. Elsewhere, Musk's satellite company, Starlink, which came to public attention for its role in providing Internet service in Ukraine after Russia's invasion, may also stand to benefit from the election. During the first Trump Administration, the Federal Communications Commission provisionally awarded Starlink nearly nine hundred million dollars under a program to deliver broadband to rural areas, but last December the agency cancelled the funding on the grounds that the company had failed to meet the program's requirements. Now some Republicans want to restore it.

Tesla is the big kahuna, however. On Thursday, its stock sank on reports that the Trump transition team is planning to eliminate the seventy-five-hundred-dollar federal tax credit for E.V. buyers that the Biden Administration expanded as part of its green-industrial policy. If this cancellation stalls further adoption of E.V.s, it would seem likely to hurt Tesla—but the outlook isn't so clear. Since Joe Biden came to office, legacy automakers like Ford and General Motors have invested heavily in new E.V.s and E.V. plants, but so far they haven't made a huge dent in Tesla's market share, which is still hovering at around fifty per cent. Musk now seems to be betting that eliminating the credits would prompt other automakers to cut back their expansion plans for the E.V. market, or even abandon them entirely, which would reinforce Tesla's dominant position. "I think it would be devastating for our competitors and for Tesla slightly," he said during a July earnings call. "But, long term, probably actually helps Tesla, would be my guess." On Thursday, Musk responded to the news that Trump was, indeed, moving toward eliminating the tax credits. "In my view, we should end all government subsidies, including those for EVs, oil and gas," he wrote on X.

Looking ahead, Musk has made clear that he believes Tesla's future hinges on its autonomous driving system, known as Autopilot, which it has been investing heavily in for years and pressing regulators to approve for a rollout. Last year, Musk said that Tesla's high stock-market valuation was "primarily on the basis of autonomy." But his plan to turn Tesla into a producer of driverless vehicles has run into obstacles. The day-to-day regulation of motor vehicles takes place at the state level, and Tesla, which was long based in California, has been making slow progress with lawmakers in Sacramento. Moreover, the National Highway Traffic Safety Administration (N.H.T.S.A.) has found that Tesla's driver-assisted version of Autopilot contributed to hundreds of crashes and more than a dozen fatalities. The agency is now evaluating the effectiveness of a software update that Tesla issued last December.

Despite the ongoing federal investigation, during a Tesla earnings call in October, Musk called for a "federal approval process for autonomous vehicles," which would dispense with lengthy state-by-state applications. He didn't explain why such a system would work better for Tesla, but, given that Trump's reëlection was in the offing, perhaps no explanation was really needed. "There will be a knock on the door for N.H.T.S.A., and it's Musk," Ives, the Tesla-stock bull, said. Ives predicted that switching to a federal system of regulation could speed up approval of driverless cars by at least two or three years. "This is what the stock is starting to reflect," he added.