What Is The Likely Impact of Elon Musk on the EV Industry via Trump?
This last week I’ve had many of our Angel and family office investors, plus our team, advisors and partnering organizations, ask me about what and how the U.S. regime change could impact the electric vehicle market in America. Since I keep getting essentially the same questions, I’ve put together the information that could provide clues to where it’s going:
The Big Picture. The amount of misinformation, disinformation and misinterpretation of what people read about EVs is truly staggering. In my lifetime I’ve never seen such a polarizing barrage, mostly negative. The stats show that EV uptake continues to ramp up in almost every region of the world. The ‘outliers’ are the United States and the United Kingdom, where the topic has become highly politicized.
Deeply entrenched interests, primarily the fossil fuels industry, legacy automakers who are struggling to make the transition, and auto dealers (who make the majority of their profits from maintenance and replacement parts, neither of which EVs require a lot of) are all trying vociferously to stall the evolution. However, the smart money knows that the shift from an over 100-year-old method of propulsion to a state-of-the-art technology will keep moving forward. Notably, the CEO of oil and gas giant ExxonMobil has publicly stated that he wants to see the U.S. remain in the Paris Climate Agreement, which he stated without admitting to petroleum’s centerline causation with climate change.
Tesla and the Chinese auto industry are both very far ahead of the traditional manufacturers technologically, and tariffs or import blocking are likely to not going to keep it all from happening, over the longer term. The entire Global South is going electric, the Chinese cars (and they are not “junk”) are already taking hold. India in particular is a fast growing EV market as is Brazil and other large countries.
The U.S. Picture. Well before voting day, myself and numerous colleagues involved with the EV sector have been thinking through what the election results could mean, here’s what we’ve concluded: it’s very likely that EPA mandates for clean emissions may get gutted along with federal tax incentives for zero emission vehicle purchases; portions of the Inflation Reduction Act funding — which could include the National Electric Vehicle Infrastructure (NEVI) initiative — potentially gone.
But there’s a ‘backstop’ that I believe will be good for the industry in Elon Musk. If you leave his political biases aside for a moment, you’ll see that he is crazy like a fox — he’s already tamped down much of Donald Trump’s EV-bashing rhetoric, and witness the leap in Tesla’s share price immediately following the election. Some are saying that he will get policies set in place that could harm all automakers other than Tesla — this makes no sense when you actually stare at the issue. He knows that if Tesla was the only EV maker, then the public will forever consider the sector ‘boutique’ and that would constrain growth. He even open-sourced many of Tesla’s patents to give other automakers an opportunity to incorporate the best technology into their vehicles (owing mainly to hubris, few took him up on it BTW).
With Musk and his PayPal cofounder Peter Thiel now having heavy influence in the White House, the tech industry is likely to get a major boost on multiple fronts — since virtually all of Musk’s liquidity is in his Tesla stock, it’s very doubtful that he would let the EV industry get hammered by policies. Of course, we’ll know about all of that very soon.
Thoughts? Please include in the comments.