Elon Musk's Potential Profit from Trump's Presidential Win

• Elon Musk, CEO of Tesla, is set to receive a substantial payback after investing at least $130 million in a pro-Trump campaign.
• On Wednesday, Tesla shares surged 15% following Trump's victory in the presidential election, and he has already gained from it.
• Elon Musk campaigned in Pennsylvania for two weeks and was thanked by Trump onstage at his Mar-a-Lago resort.

Elon Musk was present as Donald Trump celebrated his presidential victory early Wednesday morning.

Elon Musk campaigned in Pennsylvania for two weeks and was thanked by Trump onstage at his Mar-a-Lago resort.

In recent months, Musk has been using his $130 million investment in a pro-Trump campaign to fund a swing-state voter registration operation and promote his preferred candidate on his social media platform X, often with misinformation.

Despite Trump not taking office until January 20th, Musk's investment in him is already yielding returns.

On Wednesday, shares of Tesla soared 15%, increasing Musk's net worth by approximately $15 billion. Despite facing challenges from global competitors, declining European sales, and growing consumer disapproval of his political views, Tesla continues to innovate in the electric vehicle market.

Tesla is expected to benefit from Musk's relationship with Trump and the president-elect's promise to reduce regulations that Musk dislikes.

For Musk, the potential gains go well beyond Tesla.

Trump lauded Musk's SpaceX and thanked him for providing Starlink Wi-Fi terminals to disaster-stricken areas in the U.S. during his victory speech. This positive recognition from Trump gives Musk reasons to believe that a second Trump administration will benefit his businesses.

Federal agencies are currently investigating Musk's companies for various issues, including alleged securities law violations, workplace safety, labor and civil rights violations, environmental law violations, consumer fraud, and vehicle safety defects.

The executive branch's significant influence over federal regulatory agencies may result in the termination of some or all of the 19 ongoing investigations and lawsuits against Tesla, SpaceX, and X, formerly known as Twitter.

On Oct. 27 at New York's Madison Square Garden, Musk was among the many Trump supporters and surrogates who spoke during an all-day rally. The media coverage of the event primarily centered on comedian Tony Hinchcliffe's offensive remarks, particularly his characterization of Puerto Rico as a "floating island of garbage."

Howard Lutnick, CEO of Cantor Fitzgerald, introduced Musk as the "greatest capitalist" in U.S. history. Lutnick and Musk were co-founders of the "Department of Government Efficiency," and Lutnick asked Musk how much he believed could be cut from the federal budget.

Lutnick applauded while the crowd screamed after Musk stated that his answer of "at least $2 trillion" was more than the federal government's discretionary budget of $1.7 trillion.

Musk did not specify which cuts he intended, but he had previously accused regulatory agencies such as the SEC, EPA, and FAA of overreach or infringement on his free speech rights.

The Biden administration has been accused by him of hiring too many IRS personnel, and he has publicly opposed the so-called billionaires tax.

A bespoke commission could grant Musk influence over federal agencies' budgets, staffing, and the potential to advocate for the abolition of burdensome regulations.

During a Tesla earnings call on Oct. 23, Musk stated his intention to leverage his influence with Trump to institute a "federal approval process for autonomous vehicles," as opposed to the current state-level approvals.

Despite Tesla's efforts to develop driverless technology for over a decade, the company has not yet released a robotaxi or vehicle that can operate safely without a human driver ready to take control at any moment.

The government may increase its collaboration with Trump's companies.

xAI, a new startup founded by Musk, is working on creating large language models and AI software that can compete with similar products from companies like Microsoft, Meta, and others.

The U.S. government agencies in the areas of defense and national security can now use Meta's open-source Llama models. Additionally, OpenAI is already collaborating with the U.S. military after appointing a retired U.S. Army general and former director of the National Security Agency to its board in June.

Musk didn't respond to a request for comment.

SpaceX's billions in federal contracts

Since 2008, NASA, the U.S. Air Force and Space Force have awarded SpaceX over $19 billion in federal contracts, according to research by FedScout.

Geoff Orazem, FedScout CEO, predicts that the company will receive billions of dollars annually from prime federal government contracts for the foreseeable future.

The total amount spent on SpaceX's Starlink project does not include classified spending, small items like Starlink terminals, or spending done at the state level through federal block grants, such as assistance from the Federal Emergency Management Agency for natural disaster recovery.

Since 2015, Tesla has reported approximately $10 billion in sales of "automotive regulatory credits," or environmental credits, according to Orazem's analysis of the company's financial filings.

The incentives for low-emission vehicles in the U.S. are mainly driven by federal and state regulations that mandate automakers to sell a certain number of such vehicles or purchase credits from companies like Tesla, which frequently have a surplus.

In the second quarter of 2024, regulatory credits accounted for approximately 60% of Tesla's net income, while in the third quarter, they represented about 39%. Additionally, other government rebates on EV sales contributed to about 50% of Tesla's third-quarter profit.

It is unclear whether Trump will continue the rebates and regulatory credit programs, as he has previously indicated that he may eliminate the federal $7,500 EV tax credit.

Trump has pledged to reduce income taxes and impose high tariffs. Although tariffs may safeguard Tesla from Chinese rivals, this action could lead to substantial upheaval in Tesla's automotive supply chain, which depends on some components and materials from China.

Musk has been seeking to eliminate the constitutional authority of the National Labor Relations Board through litigation. However, if Trump is willing to reduce the power of the agency, which is responsible for enforcing federal laws allowing workers to form unions and engage in collective bargaining with their employers, Musk may no longer need to pursue such lawsuits.

Then there's Musk's involvement with sanctioned governments.

Despite being available in other countries, Starlink, SpaceX's satellite internet service, has not been used in Taiwan, even for U.S. troops stationed there. According to the Wall Street Journal, this was due to a favor requested by Russian President Vladimir Putin, who allegedly acted on behalf of Chinese President Xi Jinping during frequent talks between the two leaders.

If the reports are accurate, NASA Administrator Bill Nelson stated that a federal investigation should be conducted into Musk's discussions with Putin.

According to a report by NBC News, Elon Musk has frequently shared pro-Kremlin content to his vast social media following, including engaging with content from Tenet Media and its creators at least 60 times. Tenet Media was reportedly involved in a Russian covert operation aimed at influencing U.S. public opinion prior to the 2024 election, as per the Department of Justice.

Trump has frequently spoken of his affection for Putin, even since Russia's devastating invasion of Ukraine in 2022, while Vice President-elect JD Vance recently called Putin a U.S. adversary. Kremlin officials have celebrated Trump's victory in this week's election.

Elon Musk, who publicly supported Trump following the first assassination attempt on the former president in July, has stated that he plans to continue his involvement in U.S. politics in the future.

In a discussion on X on Tuesday, he stated that his super PAC would continue its work after the presidential election and would aim to impact the results of midterms, intermediate elections, and local prosecutor elections across the U.S.

Musk stated that electing district attorneys who prosecute repeat violent criminals who pose a clear threat to people is a top priority.

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