In early 2021, as the Biden administration began advancing its agenda to bolster the electric vehicle (EV) sector, Tesla, led by Elon Musk, dominated the U.S. EV market, accounting for approximately two-thirds of all EVs on American roads. Despite this, Tesla’s lack of unionized workers and scrutiny over its labor practices placed it at odds with the Biden administration, which sought to maintain favor with the influential United Auto Workers (UAW) union.
Tesla’s attempts to establish a connection between Musk and President Biden repeatedly hit a wall. Sources indicate that the administration, pressured by the UAW, opted to sideline Musk. This cold shoulder culminated in August 2021, when Biden held an EV event excluding Tesla, inviting instead executives from GM, Ford, and Stellantis. These companies, lagging behind Tesla in EV production but employing numerous UAW members, were prominently featured.
Musk’s frustration was palpable. Biden’s public praise for GM’s Mary Barra, crediting her with leading the EV revolution, further alienated Musk, who felt Tesla’s achievements were being blatantly overlooked. During Q4 2021, Tesla delivered over 115,000 EVs in the U.S., dwarfing GM’s 26, yet Biden’s narrative didn’t reflect this reality.
The relationship between Musk and the Democratic Party deteriorated rapidly. Musk’s pivot toward Trump and the GOP became evident as he began voicing support for Trump’s America PAC, albeit with contributions reportedly less than initially claimed. Musk’s growing discontent with Democratic policies was amplified through Twitter (now X), where he criticized Biden’s administration on various fronts, from economic policies to regulatory actions.
Musk’s increasing political engagement was influenced by his rising wealth, making him a target of left-leaning critics like Senators Elizabeth Warren and Bernie Sanders. This antagonism pushed Musk further from the Democratic fold. Ventures like SpaceX faced probes from the Federal Trade Commission and lawsuits from the Justice Department, which Musk perceived as politically motivated, despite these agencies’ claims to the contrary.
Despite regulatory challenges, Musk’s net worth surged during Biden’s tenure, climbing from $184 billion at Biden’s inauguration to $234 billion today. Tesla and SpaceX benefited from substantial government contracts and subsidies, including those from the Inflation Reduction Act and NASA.
Efforts to mend fences, such as a call from Brian Deese, Biden’s senior adviser, to address Musk’s concerns, and outreach from Democratic officials like Rep. Ro Khanna, underscored the complexity of Musk’s political stance. Yet, his bond with the GOP strengthened, with key figures like House Speaker Mike Johnson and Rep. Jim Jordan advocating on his behalf.
Musk’s stance on issues like gender-affirming care for minors and his response to the “woke mind virus” further aligned him with conservative viewpoints. His ownership of X and relaxed speech restrictions garnered praise from conservatives, reinforcing his shift toward the right.
While Musk’s relationship with Trump has had its ups and downs, the two have found common ground. Trump’s endorsement of Musk, despite differing views on EV subsidies, marks a significant political alliance. As Musk navigates these political waters, traders should closely monitor how his evolving affiliations and the regulatory environment impact Tesla and his other ventures.
Key Takeaways:
- Tesla’s Market Dominance and Political Snub: Despite Tesla’s leading role in the U.S. EV market, the Biden administration’s preference for unionized automakers led to Musk’s alienation.
- Regulatory and Political Challenges: Musk’s companies faced increased scrutiny from federal regulators, perceived by Musk as politically motivated actions under Biden’s administration.
- Musk’s Political Shift: Discontent with Democratic policies and increasing alignment with conservative viewpoints have driven Musk closer to Trump and the GOP.
- Financial and Strategic Impacts: Tesla and SpaceX continue to benefit from significant government contracts and subsidies, despite the political frictions.
- Trader Considerations: Musk’s evolving political affiliations and regulatory challenges could have significant implications for Tesla’s market performance and investor strategies.
Conclusion:
Elon Musk’s evolving political stance and his relationship with regulatory bodies underscore the complex interplay between corporate leadership and government policies. For traders and investors, understanding these dynamics is crucial for making informed decisions about Tesla and Musk’s other ventures.
