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Trump and Musk

1 month ago

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Writer:

Andrew Frankel | Ti co-founder

Date:

6 November 2024

Bedfellows rarely come less likely than Elon Musk and the new leader of the free world, Donald Trump. Musk is a man who voted Democrat in the two previous elections, and is on the record as calling Trump ‘nuts’ and ‘the world’s champion of bullshit’. Trump, for his part, has said that the pro-EV lobby should ‘rot in hell’. And yet there was Elon, bouncing around on stage like Zebedee on speed, giving millions away to voters in swing states, the Trump fan boy to end them all.

As a rule, we tend not to do politics on Ti and certainly have no political position to hold nor agenda to prosecute, but the possible consequences of last night’s seismic events have such implications for the car industry it would be remiss of us not at least to try to think through the likely consequences.

That there has been a deal between the two I have no doubt. It is of course possible that Musk’s support for Trump is explained entirely by his belief in people’s right to free speech – whatever that speech might contain – but it is also just possible it may have something to do with Trump’s isolationist instincts. Tesla may be the world’s most valuable car company by market capitalisation, the Model Y the world’s best-selling car last year and Musk its richest man, but the business faces pressures unlike any it has encountered before.

Is there method behind Musk's support of Trump?

Of course the European legacy brands are finally getting themselves into EV gear, but the real threat comes from China. At the end of last year BYD overtook Tesla as the world’s best-selling EV manufacturer while Chinese companies dominate battery manufacturing. CATL alone accounts for 38 per cent of all EV batteries made.

It should not be forgotten that earlier this year the Biden administration slapped a 100 per cent tariff on Chinese-built EVs which you’d imagine might have been enough for Musk. Apparently not, and the world will just have to wait and see what further measures the new Trump administration will impose. And, of course, what response this might trigger from China and any other countries around the world who fall within the firing line.

What does this mean for those companies that have bet the farm on an all-EV future? We will have to wait and see, but if there is a tit-for-tat tariff-based trade war between the US and China and possibly the rest of the world, it doesn’t bode well even for US manufacturers who cannot survive on domestic sales alone. They will have no choice but to pass price rises onto the customer, making EVs even more unaffordable at a time when they are becoming increasingly hard to sell even without such interventions.

The Tesla Model Y was the world's best-selling car in 2023, but pressures on it are increasing

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Then again, time alone will tell how closely President Trump sticks to whatever promises he may or may not have made to Mr Musk. He is an avowed EV sceptic, and with companies like General Motors and Ford still with powerful voices in Washington it remains to be seen how long two superegos like these will continue to play nicely with each other. With the White House secured, it is possible that Trump will discover that Musk has served his purpose and might soon outstay his welcome in the Oval Office.

We will see, but in the meantime, life for those with EVs to sell has certainly not got any easier overnight unless, of course, your first name’s Elon. Whether even he will rue the day he got into bed with the first convicted felon to become President of the United States time alone will tell.

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