The Business of a Political Preference: The Musk Trump Card
Linette Lopez recently wrote a compelling article for Business Insider explaining why Tesla CEO Elon Musk supports Donald Trump for President. According to Lopez, it’s essentially just business. Despite Musk’s recent proclamations that Tesla is now an AI robotics company, nearly 80% of the company’s revenue still comes from the car business. Lopez believes that Musk understands that a Trump administration would be better for Tesla’s automotive business, which remains the linchpin of the company. But how?
The Biden administration enacted one of its signature legislative achievements, the Inflation Reduction Act (IRA), which was signed into law in August 2022. The IRA extended electric vehicle (EV) tax credits, provided manufacturing incentives to support EV production, and included support for the EV supply chain. The IRA should have been a significant benefit to Tesla. However, as Musk has learned, the IRA also rapidly increased EV competition, which would not exist at current levels without it.
To combat the increased competition and the resulting decreased demand for Tesla vehicles, Musk has responded with dramatic price reductions on certain models and generous consumer financing incentives, tactics never before required to sell Tesla EVs. The impact on Tesla’s profits has been significant. The company’s profit has fallen nearly 50% when comparing Q2 2022 to Q2 2024.
Two years ago, Tesla controlled 80% EV market share in the U.S. According to S&P Global, Tesla’s market share has now fallen to 50%. While total EV market share as a percentage of the entire automotive industry in the U.S. is growing, it is the non-Tesla EVs that are driving this growth. Tesla sales, meanwhile, are declining.
As Lopez suggested in the article, a Trump presidency would most likely end the current IRA legislation. Musk understands this and wants the IRA killed—not because he opposes government incentives, but because he knows these incentives help the EV competition more than they help Tesla.