Musk’s Trump endorsement: A strategic play for SpaceX and Tesla

Elon Musk's endorsement and financial backing of Donald Trump could influence key sectors, notably benefiting SpaceX. Trump's plans for deregulation and commercial space partnerships align well with Musk's interests. Additionally, Musk hopes to leverage a Trump administration for less regulatory scrutiny on Tesla and more favourable conditions for his other ventures. The collaboration underscores both figures' capitalist ethos and potential mutual benefits across Musk's diverse companies..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..Join us for BizNews' first investment-focused conference on Thursday, 12 September, in Hermanus, featuring top experts like Frans Cronje, Piet Viljoen, and more. Get insights on electricity and exploiting SA's gas bounty from new and familiar faces. Register here..By Dana Hull.In endorsing Donald Trump and pledging vast sums to his reelection campaign, Elon Musk has positioned himself to cajole a former US president who's otherwise skeptical of electric cars. .___STEADY_PAYWALL___.As for the rest of his agenda, there's a lot to like for SpaceX, X and Musk's three other companies..Trump has vowed to reverse Biden administration policies that would funnel billions of dollars in subsidies to Tesla Inc. and its customers. But Trump also has pledged a new era of deregulation that could relieve Musk's most valuable company from some of the federal scrutiny it's under due to issues ranging from the safety and efficacy of its automated-driving technology to its chief executive officer's opposition to unions..For SpaceX, the political upside is clearer and more pervasive. The Republican Party platform that Trump helped shape calls for enhancing the government's partnerships with the commercial space sector that Musk's company dominates. It also contains a pledge to send American astronauts back to the Moon and on to Mars, virtually echoing SpaceX's multiplanetary mission..Read more: 🔒 Donald Trump eyes Elon Musk as potential policy adviser.Other potential puts and takes from Musk becoming a major benefactor may include convincing Trump to regularly post again on the Musk-owned social network, X, which would drive traffic to the platform where the former president has some 87.6 million followers. Whether advertising dollars would follow is unclear, but a Trump return likely would reinforce X's cultural relevance and further position the platform as a welcome place for right-leaning users.."Musk is the ultimate capitalist, and Trump is a kindred capitalist in spirit," said Lou Peluso, an Alvarez & Marsal managing director who co-leads the consulting firm's aerospace, defense, aviation and space industry group. "Elon is hoping there will be a more favorable environment for his many businesses, whether it's fewer regulatory hurdles or more favorable support to drive growth.".Elon Musk wearing an Occupy Mars t-shirt at SpaceXs Starbase facility in Boca Chica, Texas, in August 2022. Photographer: Jordan Vonderhaar/Bloomberg.Musk didn't respond to an email seeking comment. In replying to a follower who predicted Wednesday that Trump will retake the White House and have a good relationship with him, Musk wrote: "It will work out well.".Trump's calls for reigning in regulations and championing artificial intelligence and other innovations fit neatly with the pursuits of Musk's chatbot developer xAI, brain-implant maker Neuralink and tunnel constructor The Boring Company. But the enterprises with the most at stake are his two most valuable..IRA and Regulators.The Inflation Reduction Act that President Joe Biden signed into law in August 2022 made Tesla customers eligible for as much as $7,500 in federal tax credits, and also included incentives for companies to make battery cells and packs in North America. Tesla and its battery partner, Japan's Panasonic Holdings Corp., are poised to reap billions more in manufacturing tax credits in the coming years than any other companies, researcher Benchmark Mineral Intelligence predicted last year..Musk has sought to downplay the loss of these perks in the days since he endorsed Trump on July 13.."Take away the subsidies. It will only help Tesla," Musk posted on X three days later. "Also, remove subsidies from all industries!".Last year, however, Tesla discounted one of its more expensive vehicles, the Model S, by more than $40,000 in order to qualify the sedan for tax credits. Musk also referred to the IRA as "helpful" and "well-written" in an interview with CNBC..A Tesla Model Y at the company's showroom in New Yorks Meatpacking District. Photographer: Yuki Iwamura/Bloomberg.Musk has accused the Biden administration of engaging in "lawfare" against him and his companies, though several of his run-ins with regulators pre-date Biden's presidency. Tesla's cases and investigations range from the Justice Department probing potential personal-benefit violations, the advertised range of its vehicles and features the carmaker markets as Autopilot and Full Self-Driving; the US Equal Employment Opportunity Commission alleging racial discrimination at the company's factory near San Francisco; and the National Labor Relations Board's finding that Musk illegally threatened workers against unionizing..Last month, Musk told a Tesla shareholder he could be persuasive, when asked how he managed to draw praise from Trump despite his criticism of EVs.."I have had some conversations with him, and he does call me out of the blue for no reason," Musk said. "A lot of his friends now have Teslas, and they all love it, and he's a huge fan of the Cybertruck. So, I think those may be contributing factors.".Space Boost.Trump has offered high praise of SpaceX going back to his first term, including when the closely held company hosted him for a launch in May 2020.."This has been your baby," Trump said to Musk during a launch briefing at Kennedy Space Center in Florida.."This is the top focus by far, absolutely," Musk replied..SpaceX ferries astronauts to and from the International Space Station for National Aeronautics and Space Administration and launches sensitive military payloads for the US military, including the US Space Force, which was set up during Trump's presidency..In addition to seeking billions of dollars worth of government contracts — which have flowed to SpaceX while Biden has been in the White House — Musk may push for a Trump administration to reconsider excluding the company's space-based internet business from receiving $886 million in federal subsidies to provide broadband service to rural communities..The Federal Communications Commission rejected the subsidy request from SpaceX's Starlink unit in August 2022, claiming the company's technology is still developing and the service's speeds were insufficient. The company filed an appeal that was denied in December.."I'm sure Musk has a list" of what he wants, Alvarez & Marsal's Peluso said. "What sets Elon apart is this: No one else is willing to underwrite, so publicly, what their agenda is in such a fearless way.".Read also:.🔒 Cathie Wood says Tesla's stock could surge tenfold with autonomous taxisElon Musk becomes Donald Trump's kingmaker after political endorsementTrump and Musk discuss crypto policy amid campaign talks, potential convention role.© 2024 Bloomberg L.P.

Musk’s Trump endorsement: A strategic play for SpaceX and Tesla

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