Billionaire Elon Musk stands to benefit greatly if Republican candidate Donald Trump wins the election. But what if the outcome is not what he expects? Will a Kamala Harris presidency leave the future of Elon Musk's business empire uncertain?
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| US Election 2024: Billionaire Elon Musk's 'all-in' move, or a calculation that benefits everyone? (Source: Getty images) |
Observers say billionaire Elon Musk and his business empire could face many risks in the 2024 US presidential election season.
Since his decision to throw his all into supporting former President Donald Trump in July, the tech billionaire has not wasted any media opportunity, making full use of his “homegrown” social network X to multiply his support for the Republican Party. He also did not hesitate to show off his “hotness” - one of the people with leading economic and technological power, when appearing on stage with candidate Donald Trump in several election campaigns.
Billionaire Musk has also hosted his own series of political “talks” and invested more than $130 million in efforts supporting former President Trump this year.
He also pledged and made random donations of $1 million a day to voters in swing states who signed up to support free speech and the right to bear arms — a move that would help the Republican candidate return to the White House.
The wealthy CEO even accepted a lawsuit over this donation. And just one day before the US presidential election, a Pennsylvania judge decided to allow billionaire Musk to continue the program of giving money to voters in "battleground" states, despite objections from Philadelphia prosecutors.
What does billionaire Elon Musk get from Donald Trump's presidency?
It is likely a lot, the media commented.
Many of Mr. Musk’s companies rely heavily on federal approvals, regulations, subsidies or contracts — and Mr. Trump has promised a more lenient regulatory environment with plans to cut corporate and individual taxes.
If Republican candidate Donald Trump returns to the White House, Mr Musk could benefit from “key appointments in public administration”, said Francesco Trebbi, a professor of business and public policy at the University of California, Berkeley. This could secure for the billionaire valuable relationships that will last much longer than just the next four years.
Former President Trump incorporated some of Mr. Musk’s policy proposals into his campaign, with plans to create a Commission on Government Efficiency headed by the world’s richest billionaire himself. Mr. Trump said the Commission would conduct a “financial and operational audit of the entire federal government” and propose “dramatic reforms.”
On October 18, at a speech in the battleground state of Pennsylvania, billionaire Musk proposed firing some federal employees. Or more recently, in Pittsburgh, he asked "why do we need 428 agencies, or why do we need 100 agencies?"
Erik Gordon, head of the Department of Business Studies at the University of Michigan's Ross School of Business, said a Trump presidency could give CEO Musk "more freedom to develop cutting-edge technologies - one of the things he loves to do."
Tesla is at a critical juncture, as investors eye the tech billionaire’s pledge to secure approval for fully autonomous vehicles in Texas and California. However, approval studies of Tesla’s self-driving technology by government agencies, including the National Highway Traffic Safety Administration, could slow down the company’s autonomous vehicle plans.
During a recent earnings call, CEO Musk suggested that, if there were an effective government agency, he would help expedite the approval process state-by-state, in the “federal approval process for autonomous vehicles.”
Meanwhile, for SpaceX, Professor Trebbi said, a Trump presidency could help the company win major contracts with the US Department of Defense. That could help SpaceX maintain an advantage over rivals like Blue Origin.
So if Mr. Trump wins, billionaire Musk could gain power, government contracts and possibly looser regulations under the new administration.
Under President Harris...
But if Kamala Harris becomes the owner of the White House, will the future of the tech billionaire become uncertain?
One key policy on the minds of many US business leaders is Democratic candidate Kamala Harris’ proposed tax reform plan. Harris aims to raise the corporate tax rate from 21% to 28% – a move that Bank of America estimates could reduce corporate earnings by as much as 5%.
The tax, combined with the potential for tighter regulations, could impact a number of companies, including those owned by billionaire Musk. Gordon said Harris could introduce new safety regulations or introduce tax credits for EVs or AVs that would benefit competitors.
As for X , which Mr. Musk sees as a platform for free speech, the University of Michigan researcher predicts that Ms. Harris’s administration could press for a ban on material labeled as “misinformation.” However, X would likely prevail under the First Amendment, Mr. Gordon said.
Meanwhile, Tevi Troy, a senior fellow at the Bipartisan Policy Center, said it was unlikely — and likely illegal — for Harris to issue an order targeting a businessman like Elon Musk. But Musk could be subject to “some selective enforcement,” according to the veteran expert, who is also a former senior White House aide and several business veterans. Or entities owned or controlled by Musk could inadvertently be subject to increased scrutiny.
But it's also possible that nothing significant will change for CEO Musk under a Harris administration.
"We don't see any indication that Ms. Harris wants to significantly expand the regulatory burden on businesses," said Cary Coglianese, a law professor at the University of Pennsylvania and director of the Penn Program on Regulatory Processes.
Tom Narayan, an analyst at RBC Capital Markets, even suggested that a Democratic administration might be better for CEO Musk because Kamala Harris supports the Inflation Reduction Act (IRA) and manufacturing in Mexico - something Republican candidate Trump has spoken out against. The IRA has brought significant benefits to Mr. Musk's business empire, including a $7,500 tax credit for new electric vehicles, which supports Tesla. It also provides tax credits for solar installations.
Meanwhile, Trump campaign national press secretary Karoline Leavitt said that if elected, President Trump would support the auto industry, "making room for both gasoline-powered and electric cars." However, the former president plans to end the Green New Deal and cancel unspent IRA funds in an effort to "quickly beat inflation and bring everything down."
Professor Francesco Trebbi of the University of California commented that he considered billionaire Musk's association with the Republican Party as a "hedge strategy", designed to prevent government regulations, as well as maintain government support regardless of who wins the election.
University of Pennsylvania law professor Coglianese said it was possible that Mr. Musk saw himself as someone who could “turn the federal government upside down,” similar to his approach when buying Twitter. However, he said the strategy of aligning with Mr. Trump was risky.
“He’s counting on a president who wants or is willing to reward loyalty,” Professor Coglianese said, adding that — but not always — the strongest supporters get everything they want.
For example, billionaire investor Carl Icahn resigned from his unpaid position as special adviser to the 45th President of the United States amid criticism of possible conflicts of interest. Other cases have ended better.
“There are ethical rules that require compliance with various obligations, including conflict-of-interest reporting, for some government positions. Entrepreneur Elon Musk may not want to take on these obligations,” said Joan MacLeod Heminway, a law professor at the University of Tennessee.
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