Tesla Motors Inc. (NASDAQ:TSLA) may have a rough four years. After an upset victory on Tuesday night, many experts are now warning that Tesla will be negatively affected by a Donald Trump presidency. One of the reasons is that a Republican-controlled White House and Congress may support new U.S. energy policies that favor traditional fuel sources, like oil and coal. This would impact Elon Musk in a big way. Tesla will likely be the most watched car maker in the U.S. auto industry over the next four years. Some new energy policies being presented soon may have implications for Tesla.
Kathryn Thomson, a former top lawyer for the Department of Transportation, warns that if you favor energy-efficient solutions and sustainable options then you should be scared of the incoming administration and the GOP-controlled Congress.
“Anybody who advocates for energy-efficient, sustainable solutions should be worried,” Thomson told the Washington Post. “On the one hand, Trump is saying, ‘Let’s look at all the options,’ and that’s positive. On the other hand, he seems to be pushing more-conventional fuels and technologies. And that’s not good for innovation, and that’s not good for efficiency and sustainability.”
During the 2016 election campaign, Trump has noted that he may quash regulation on fossil fuels. He has also been a strong supporter of the Keystone XL oil pipeline. Trump has also been a strong advocate for the coal industry. Moreover, Trump promised that his energy policies would refrain from picking winners and losers. And this is what is worrying green firms, like Tesla.
By not picking winners and losers, green energy firms, like Tesla, would have a tough time without state subsidies and support. This is part of the reason why Tesla CEO Elon Musk has repeatedly suggested that the billionaire is “not the right guy” for job as U.S. President.
But it isn’t just the lack of subsidies that may impact Tesla and other green firms.
Tax credits offered to consumers who buy electric cars are expiring soon. These tax credits give consumers up to $7,500 for buying an electric car. This means a Tesla Model 3 would see its price-tag slashed from $35,000 to $27,500. It is possible that Trump and the GOP would not renew the tax credits.
Simply put: electric cars would be more expensive in the near future.
“Traditionally, Republicans have been less supportive of policies that promote one technology over another, so there could be some austerity measures that could threaten alternative fuel incentives,” said John Eichberger, executive director of the Fuels Institute, in an interview with the newspaper.
Tesla has two options: lower the cost of electric cars as quickly as possible or wait until the 2020 campaign.
Tesla Motors Inc’s Elon Musk Doesn’t Like Donald Trump
For the past 18 months, Musk has been highly critical of Trump. Instead, he believed that Hillary Clinton and her various domestic policies were “the right ones” for the country.
Here is what Musk said just days before Election Day:
“I feel a bit stronger that [Trump] is not the right guy. He doesn’t seem to have the sort of character that reflects well on the United States.”
Despite Trump’s insistence of corruption, Musk said that he doesn’t think there is corruption in Washington. Speaking during a Vanity Fair ‘s New Establishment Summit last year, here is what Musk told the audience:
“On balance I guess it’s not that corrupt because if it was corrupt than SpaceX wouldn’t have a chance,” he said. “The greater the level of visibility, the less corruption there is… basically, how much attention people are paying, that defines how much corruption there is.”
For the most part, Musk believes the outcome of the election won’t have much impact on Tesla.