Elon Musk has been handsomely rewarded for his strong support of Donald Trump after the latter spectacularly won the 2024 presidential election. Following Trump’s victory, Tesla’s stock rose 15%, increasing Musk’s personal wealth by $25 billion.
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Last night, Donald Trump won a major victory in the 2024 elections. Trump not only won the Electoral College, but when the vote counting is done, he will most likely also win all the swing states and the popular vote.
His party also flipped the United States Senate, and it is looking like the Republicans will maintain control of the House of Representatives. This gives Trump control of both the executive and legislative branches, and if you add the conservative Supreme Court, Trump will also have the judiciary.
This was an unqualified success for Trump in all aspects, and as one of his biggest supporters, Elon Musk is already starting to reap the benefits of his strong Trump endorsement.
As election results started to emerge indicating that Trump would become the 47th president of the United States, Tesla's stock shot up by a whopping 15%. This increased Tesla’s stock price from yesterday’s close of $251 to a peak of $290 a share.
When multiplied by Tesla’s 3.2 billion outstanding shares, yesterday’s move increased Tesla’s market cap from $803 billion to nearly $928 billion within hours.
This is a $125 billion increase and one of the biggest market cap appreciations in Tesla’s history. As the EV maker’s largest shareholder, owning approximately 23% of the company (depending on whether he’s able to keep the 2018 stock award), Musk, personally, has also greatly benefited from Trump's victory.
Leading up to the election, Musk famously was giving out a million dollars a day to swing state voters to boost Trump's election prospects. Overall, Elon Musk has spent tens of millions of dollars to support Trump, and in return, today, after Tesla’s share price increase, he has been awarded $25 billion.
Spending $50 million to get $25 billion in return; that’s not too bad of an investment. However, the spectacular nature of Trump’s and the Republican party’s win might actually come back to bite Musk.
Most of Tesla’s vehicle lineup currently qualifies for a $7,500 point-of-sale EV tax credit through the Inflation Reduction Act. This significantly decreases the price of the company’s vehicles.
Not only that, but Tesla also directly receives benefits for building battery cells and battery packs in the US. The company’s storage battery products and solar products are subsidized to the tune of billions of dollars per year.
However, now that the Republicans have both houses of Congress and the presidency, they can act on their promise and easily roll back the Inflation Reduction Act and other incentives that add billions of dollars to Tesla’s bottom line.
In addition, Republicans can relax the Corporate Average Fuel Economy (CAFE) standard, which has helped Tesla earn tens of billions of dollars by selling clean vehicle credits.
Having said that, over the years, Musk has maintained that Tesla doesn’t need any subsidies to become successful, with the caveat that government incentives are removed from all industries, including the oil and gas industries.
This might be true; however, given the current political environment, it’s unlikely that there is any appetite to remove subsidies from the oil and gas industries.
What’s interesting here is that even before all the subsidies are removed, Tesla is already struggling to grow vehicle deliveries, with sales remaining flat in the past two years.
Although Tesla states that the company has installed capacity to build 3 million vehicles, the EV maker’s sales have remained flat at around 1.8 million cars for both 2023 and 2024.
It’ll be interesting to see how Tesla’s sales will be affected if all the clean vehicle and clean energy subsidies are removed. Let me know what kind of effect the Trump government will have on Tesla going forward. Share your ideas by clicking the red “Add new comment” button below. Also, visit our site, torquenews.com/Tesla, regularly for the latest updates.
Image: Screenshot from C-SPAN YouTube channel
For more information, check out: Tesla Finally Responds to the Cybertruck Tow-Hitch Controversy, Says “The 11,000 lb Tow Rating Isn't Absolute”
Tinsae Aregay has been following Tesla and the evolution of the EV space daily for several years. He covers everything about Tesla, from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.
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