Elon Musk Endorses Donald Trump. Could It Hurt Tesla? : NPR

Tesla CEO Elon Musk applauds Israeli Prime Minister Benjamin Netanyahu during a joint session of Congress at the U.S. Capitol on Wednesday. Musk supported former President Donald Trump's campaign, but he said he doesn't donate $45 million a month to the cause. Saul Loeb/AFP via Getty Images

. Saul Loeb/AFP via Getty Images

Tesla CEO Elon Musk is endorsing former President Donald Trump in the highly polarizing 2024 presidential election, raising questions about whether the move could cause current or potential electric vehicle buyers to shun the automaker.

The speculation comes at a time of transition for the broader electric vehicle industry and Tesla in particular. On Tuesday, the company reported a 45% drop in quarterly profits compared to the same period in 2023, saying it is currently in the middle of two major growth waves.

In its earnings report, Tesla said it has sufficient liquidity and resources to carry out its plans during this uncertain time.

Other automakers have also reported less-than-stellar financial results for their electric vehicle lines. But in Tesla’s case, Musk’s endorsement of a Republican candidate who opposes lucrative federal tax credits for electric vehicles is fueling speculation about the company’s overall strategy and whether it could be hurt by its CEO’s political sentiments.

What did Musk do?

Elon Musk said, “I fully support President Trump” after the July 13 assassination attempt in Pennsylvania. He has also been linked to a pro-Trump super PAC. On Sunday, Trump told a crowd at a rally in Michigan that he had recently spoken to Musk.

Elon endorsed me the other day and I read, I didn't even know. He didn't even tell me about it, but he gives me $45 million a month.

But Musk took a different tack when recently asked if he supported the former president.

What has been reported in the media is simply not true, Elon Musk said in an interview with psychologist and expert Jordan Peterson, published Monday. I am not giving Trump $45 million a month.

What I did is I created a PAC, a super PAC, called America PAC, he said, adding that the money would be used on both the Democratic and Republican sides.

“This is not a hyperpartisan PAC,” Musk said. “Our intention is to promote the principles that made America great. I wouldn’t say, for example, that I’m for the MAGA Make America Great Again movement. I think America is great. I’m for the MAG Make America Greater movement.”

The super PAC has been linked in recent reports to political operatives in the inner circle of Florida Gov. Ron DeSantis (who was once suggested as Musk's potential frontrunner among 2024 candidates).

The goal of the super PAC is to support meritocracy, Musk said.

“You get ahead through hard work and skill, and nothing else,” he said. Another goal, he added, is to promote freedom of action, meaning as little state intervention as possible.

Musk’s support for Trump comes after months of controversial statements and criticism of Democrats and the Biden administration. For example, in 2021, he noted that the White House apparently snubbed him and Tesla when it hosted an event setting ambitious goals for zero-emission vehicle sales in the United States. In May 2022, Musk tweeted that he would vote for a Republican for the first time.

Trump has often derided the growing trend in electric vehicles. And his running mate, Sen. J.D. Vance of Ohio, shares that view. Last fall, Vance introduced a bill in Congress that would repeal four separate tax credits for electric vehicles and instead provide up to $7,500 for new gasoline- or diesel-powered vehicles made in the United States. In an op-ed for The Toledo Blade, Vance urged the United Auto Workers (then on strike) to use their influence to end subsidies to the U.S. electric-vehicle industry, which he called a failed experiment.

What are passionate electric vehicle fans and customers saying?

On Tesla owner forums such as Tesla Motors Club and Tesla Owners Online, responses to Musk's shift to the political right range from dismay at his support for Trump, who regularly criticizes electric vehicle funding, to confidence that Musk is playing a strategic political game to protect Tesla.

For members of the Kalamazoo Electric Vehicle Association in Michigan, there's a long-standing unofficial rule: Avoid politics and focus on a common goal of driving electric vehicle adoption, says the group's leader, Paul Pancella, who is also a physicist at Western Michigan University.

That rule is widely respected, Pancella told NPR. And he says it's easy to give Musk credit where credit is due as an entrepreneur, a businessman, perhaps even a visionary, no matter what he says about politics or other issues.

“I’m concerned that it’s not going to help drive more EV penetration in the automotive market,” Pancella says of Musk’s public statements in recent years. Tesla vehicles offer good value for money compared to other EVs and cars in general, and are arguably the best option for those who want to drive long distances on a regular basis.

That concern isn’t unwarranted, according to recent data from CivicScience. The consumer research firm cites data from mid-July showing that environmentally conscious consumers or Democrats view Musk and Tesla less favorably than they did earlier this year.

“This data highlights a real challenge for Tesla,” John Dick, founder and CEO of CivicScience, said in a statement to NPR. “Electric vehicle buyers skew left of center politically, given their concerns about climate change and fossil fuels. However, when an automaker’s CEO publicly speaks out in support of a Republican candidate or cause, it will naturally steer those buyers toward other alternative brands.”

Other sources of fallout are more obvious. In Connecticut, Democratic Rep. Aimee Berger-Girvalo reportedly said last week that since Musk began aligning himself with extreme authoritarian values, Democrats were less likely to support state legislation that could benefit Tesla.

How is Tesla doing?

Profit fell 45% in the second quarter of 2024 compared to the same period last year, the company said Tuesday, with net income of $1.48 billion in the latest quarter. In its automotive business, total revenue fell 7% compared to the second quarter of last year.

The results suggest that Tesla is going through the same doldrums as the rest of the electric vehicle sector, with some signs of momentum. For one, total revenue hit $25.5 billion: Tesla said it posted record quarterly revenue despite a challenging operating environment, including high interest rates.

On the other hand, the company attributes the decline in its profits to factors such as market adjustments and investments in long-term plans. Tesla cited falling car prices and rising operating costs, largely due to AI projects.

Tesla's profits were boosted by record revenue from regulatory credits, as the company collected $890 million in sales to other automakers to offset their vehicles failing to meet emissions standards. The company also saw rapid growth in its energy generation and storage businesses.

As for its new and planned vehicles, the automaker said production of its Cybertruck more than tripled from the previous quarter and it remains on track to reach profitability by the end of the year. The company says it is on track to produce electric semis by the end of next year.

Tesla also has high hopes for its long-promised Robotaxi vehicle, saying it has outsized potential value. On a post-earnings call, Musk said the Robotaxi is expected to be unveiled on Oct. 10, according to Investors Business Daily.

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