Tesla CEO Musk (right) at the U.S. Capitol in Washington, DC, Wednesday, July 24, 2024.
Samuel Kunlun | Bloomberg | Getty Images
When Elon Musk endorsed Donald Trump for president last month, Tesla The founder and CEO is backing a candidate who vows to “drill, baby, drill,” “end EV mandates” and reduce subsidies that have helped Tesla become the dominant U.S. electric car maker.
Government loans, tax breaks and other electric vehicle policies have played such a big role in Tesla’s rapid growth that even as Musk has come to embrace the former president and his Republican rhetoric in recent years, the company has continued to lobby U.S. and state government to get the benefits Tesla advocates.
In February, for example, Tesla urged the Biden administration in a filing with the Environmental Protection Agency (EPA) to allow California to impose stricter vehicle emissions rules than the rest of the country, an idea Trump opposed.
Months ago, in a previous filing with the agency, Tesla lobbied for regulations that would ban by 2035 the production of most new gasoline-powered vehicles, the so-called “electric vehicles” criticized by Trump and others on the American right. injunction”.
The disparity is not the first time the billionaire entrepreneur has sent mixed signals in business and politics – he himself has become increasingly disdainful of subsidies.
“Elon tends to say he’s hostile to subsidies, while Tesla is gobbling up subsidies like a hungry Godzilla,” said Mike Murphy, a Republican strategist who runs the Electric Vehicle Political Project, a group based in A Los Angeles-based advocacy group seeking bipartisan support for electric vehicles.
People familiar with Musk’s management at the automaker told Reuters he is pragmatic in his approach to subsidies and is willing to accept public funds if available. At the same time, Musk’s willingness to ignore outright Republican opposition to the industry he helped create is indicative of his broader focus on goals that may be at odds with the immediate interests of his businesses.
“Tesla is not his ultimate goal,” said Lehigh University management professor Andrew Ward, who noted that Musk has stakes in areas such as artificial intelligence, space exploration and neuroscience. Ward added that Musk could “sacrifice some of the short-term benefits of Tesla if it satisfies the long-term benefits of his ambitions.”
Musk and Tesla did not respond to Reuters’ requests for comment. Trump’s spokesman also did not respond. A White House spokesman declined to comment.
The growing ties between Trump and Musk may be on display Monday night, when the Tesla boss plans to interview the Republican candidate on Musk’s social media platform, X.
It’s unclear exactly what ambitions Musk is seeking to achieve by increasingly outspokenly rejecting progressive platforms, from electric car subsidies to identity politics.
His support for Trump, once tenuous, solidified in July, when Musk backed Trump after a failed attempt to assassinate the former president and said he would fund a political action committee that federal records show has spent $21 million. Come support him and oppose Trump.
A few days after the endorsement, a user on X asked Musk if he would comment on Trump’s views on electric vehicles. “It’ll be fine,” Musk replied.
Whatever the outcome for Musk, the public record makes clear that Tesla has benefited from government assistance since its founding more than two decades ago, in large part because of its role in pushing the U.S. toward cleaner cars. Tesla’s first large-scale manufacturing facility in Fremont, California, was developed with the help of a $465 million loan from the U.S. Department of Energy, which was repaid over three years.
Most recently, since 2018, Tesla has sold its so-called “Supervise points, open a new tabSecurities filing documents show.
“There would be no Tesla without California regulators,” California Gov. Gavin Newsom said at a 2022 meeting, citing the importance of state credit to the automaker’s finances.
A Reuters review of congressional lobbying records and Tesla’s public comments to federal and state regulators shows that the company has struggled to enact public policy that favors such benefits.
Earlier this year, Tesla said in a February filing with the U.S. Treasury that continued government support would “reduce greenhouse gas emissions and protect the nation’s public health and welfare” by accelerating the transition to fossil fuels. .
“A sensible person”
Musk has criticized Trump for ignoring the challenge of climate change.
In June 2017, five months after Trump took office, Musk quit a White House advisory panel as the administration withdrew from the Paris Agreement, a landmark 2016 treaty aimed at addressing global climate issues. “Climate change is real,” Musk wrote at the time. “Leaving Paris is not good for America or the world.”
After Trump lost the 2020 re-election bid, Musk told Fortune that he was “very excited” about President Joe Biden’s climate change agenda and was optimistic about “the future of sustainable energy.”
Musk quickly soured, though, angry that the White House didn’t invite Tesla to the 2021 gathering of electric vehicle makers in a well-documented incident. By December of that year, Musk distanced himself from Biden’s initiative and criticized what eventually became the Inflation Reduction Act (IRA), a major economic stimulus package built in part on clean energy subsidies .
“I’m willing to foot the entire bill,” Musk told the Wall Street Journal at the time, saying Tesla didn’t need public funds.
However, since the law passed in August 2022, Tesla has been singing a different tune. In formal comments submitted to the Treasury Department and IRS, the company praised the law and said it would seek “ongoing engagement … to ensure these benefits of IRAs are fully realized.”
In addition to other benefits provided by the law, electric vehicle buyers can receive subsidies of up to $7,500 per vehicle if the purchaser meets certain income requirements. Tesla said tax credits provided in battery manufacturing laws could bring the company up to $250 million in revenue per quarter. Musk himself said on a conference call last year that the incentives “could be huge.”
Additional formal comments with various federal agencies seeking government assistance continue. A July 2023 filing with the U.S. Environmental Protection Agency (EPA) called for compassion for the downtrodden: Tesla lobbied the agency to enact tighter emissions limits to ameliorate “unhealthy conditions in many urban areas, including those for disadvantaged communities.” air quality”.
For Tesla, emissions control isn’t just about the environment.
By increasing demand for regulatory credits from manufacturers of less energy-efficient vehicles, the tighter restrictions have helped Tesla continue to make billions of dollars by selling those credits to rivals such as General Motors and Stellantis. Sales of those points generated $890 million in revenue for Tesla last quarter alone, according to a July securities filing. The company reported net profit of $1.5 billion for the quarter.
GM said in an email that it purchases such credits to keep up with changing market and regulatory conditions. Stellantis did not respond to a request for comment.
Trump opposes tighter emissions rules and criticizes subsidies for electric vehicle manufacturers. Musk echoed the same sentiment shortly after endorsing the former president. “Remove subsidies,” he wrote on social media, a week after Tesla unveiled its $890 million windfall credit. “This can only help Tesla.”
Some shareholders disagree. Outspoken investor Ross Gerber, whose company held about $58 million in the automaker as of the first quarter, told Reuters Musk’s support for the former president was “100 percent.” contrary to his own personal economic interests” and “a person’s economic interests”. The most important clean energy company is Tesla. “
In interviews, three former Tesla employees involved in the company’s public policy work told Reuters that the conflict some see as more of a battle between ideology and pragmatism. As a supporter of free markets, Musk is inherently opposed to most government intervention, they say. Still, if free money or other perks are available, Tesla would be foolish not to take advantage of them.
“He was a very sensible man,” said one former employee.
Still, Tesla’s recent lobbying efforts contradict Trump’s rhetoric, such as his repeated calls to “end electric vehicle mandates.” Although no such mandate exists, the Biden administration and states including California have sought to encourage the phaseout of production of cars that use fossil fuels.
In a July 2023 filing with the EPA, Tesla directly called for an end to the production of gasoline vehicles, calling the measure “critical” to solving the “rapidly escalating climate crisis.” Musk became cautious, writing on social media in June: “The risks of climate change are exaggerated in the short term, but may be accurate in the long term.”
This inconsistency isn’t limited to Musk’s environmental views.
In a May 2022 filing with California’s emissions regulator, the California Air Resources Board, Tesla declared itself a “leader in creating a diverse and inclusive workplace.” Many of the company’s employees “come from communities that have long struggled to break down historical barriers and fight for equal opportunity,” the report said. “Communities of color disproportionately bear the impacts of air pollution,” the report reads.
The filing comes just days after Musk, who has grown increasingly disdainful of identity politics, made clear in a social media post that he could no longer support Democratic candidates. He wrote at the time that Democrats were “the party of division and hate.”
In the weeks since Vice President Kamala Harris succeeded Biden as the party’s White House nominee, Musk has made his distaste for her campaign clear. Last week, after an X user posted a video montage of Harris talking about “fairness” and “equality,” Musk responded: “Kamala is indeed a communist.”
“Trump was bought and paid for by extremist, anti-worker billionaires, and Elon knows Trump will do it at the expense of the middle class,” Harris campaign spokesman Joseph Costello said in a statement. , giving him reckless tax benefits.
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