Musk And President Elect Trump Could Turn Tesla Into A Far Stronger World EV Power

While Trump isn’t a fan of EVs, Elon Musk will be on his cabinet, making Tesla likely to gain unusual and unique government support. This support should allow them to fight against China better and grow to world EV dominance.

President-elect Donald Trump isn't a fan of EVs but is putting Elon Musk into his cabinet. Musk controls Tesla, the largest EV maker in the West (BYD is challenging Tesla in the East and is on track to become more extensive). This creates an interesting dynamic, but it could be perfect for Tesla's ability to compete with companies like BYD because while the Obama and Biden administrations were verbal backers of EV sales, they didn't execute to the level of the Chinese government, which has put US EV makers, including Tesla, on their back feet against a far more aggressive Chinese Government.

Springtime For Tesla

While Tesla has made an impressive run with EVs, it has been struggling to complete its line, and Cybertruck has become a bit of an anchor on the company. Tesla continues to show promise, but Chinese EV makers are underpricing and outexecuting the company, and in places like Australia, Chinese EV makers have a significant advantage over Tesla in both pricing and volume.

More aggressive government backing for Tesla, which is now far more likely, should at least even the playing field between that company and its Chinese competitors, creating a far better defensive and offensive capability for the companies' competitive efforts.

However, while this government help will be incredibly beneficial, Musk, already spread very thinly across the companies he manages, will likely not be able to spend as much time running the company. However, given his recent decisions, including the design of the Cybertruck, which haven't been beneficial to the company, this may also be a good thing. The more he delegates to his more automotive-focused subordinates, the better Tesla should do, also benefiting the company long term.

So, while this move may not be as beneficial for more traditional car makers who are slowly embracing EVs, it will be an interesting dance to watch because Ford, GM, and Stellantis will likely not stand by if Tesla is uniquely benefited by Musk's relationship to the new administration, creating what I expect will be a bit of drama.

Tesla Costs

Neither Musk nor Trump are fans of Unions, and while Unions do protect workers, they are a drag on company operations. They can reduce not only a company's operating efficiency but also its profitability. So, I would expect Tesla's Unions to be weakened significantly by this move. While the current administration aggressively stays out of Union disputes or supports the Unions, the new administration will not make it unwise for Tesla's Unions to strike from such a weakened position.

This should allow Tesla to be even more aggressive with AI and Robotics as worker replacements and to move more aggressively to reduce labor costs, which, based on the subsequent financial benefits, is likely to spread to other auto companies.

While these battles are likely to disrupt vehicle supplies for a time, without government support, the Unions will unlikely prevail. This will weaken them substantially in the long term and allow Tesla and others to open up non-union sites more successfully or move to non-union sites in the future.

In addition, I'd expect to see Tesla get financial subsidies and be immune from the promise of foreign Tariffs that will adversely impact Tesla's domestic and foreign competitors.

There is a decent chance that Tesla could emerge as the last US Automaker once the dust settles, though this is far from certain.

Wrapping Up:

With enough government support, Tesla could be put in a position to better fight back against Chinese EV makers and not only survive what is likely to be an automotive purge as the world shifts to EVs and China's EV strength peaks but also push back against these Chinese incursions with unusual strength.

The wild card is whether the European markets will allow this much US government influence in the market, but facing a massive Chinese incursion of EVs, they just might make for what could potentially be one of the strongest year-over-year performance opportunities Tesla has ever had.

They will have to execute, however, and Tesla has been struggling to execute well lately. If they can execute, this could be a once-in-a-lifetime opportunity for the company.

Rob Enderle is a technology analyst at Torque News who covers automotive technology and battery development. You can learn more about Rob on Wikipedia and follow his articles on Forbes, X, and LinkedIn.