Tesla (TSLA, Financial) CEO Elon Musk has expressed support for former President Trump's plan to eliminate federal tax credits for electric vehicles (EVs), a move some experts believe could benefit Tesla. Musk is not only Tesla's CEO but also a key advisor to Trump, and he is set to lead the government's efficiency department under Trump's administration.
There is widespread speculation that Trump might end federal support for EVs. Reports indicate that Trump's transition team is preparing to cancel the $7,500 EV tax credit, a significant element of President Biden's efforts to accelerate EV adoption in the U.S. Musk reportedly supports Trump's decision, which could pose challenges for the broader EV industry during Trump's potential second term.
Analysts suggest two reasons for Musk's support. First, Tesla may benefit from Trump's anti-EV policies. Musk has previously stated that removing federal tax credits could benefit Tesla in the long run, as it could be detrimental to competitors. Tesla is one of the few profitable EV manufacturers in the U.S., allowing it to weather industry challenges better than domestic rivals. The company can produce EVs at a lower cost, enabling it to reduce prices in a subsidy-free market.
Second, Musk's backing of ending EV subsidies may stem from his significant investments in autonomous driving and robo-taxis. He has emphasized that Tesla's value lies overwhelmingly in autonomy, considering other issues as minor distractions. Reports suggest that Trump's team plans to prioritize a federal framework for autonomous vehicles, which could expedite their adoption. This framework would benefit Tesla, which recently unveiled prototypes of two new autonomous vehicles.
Analysts believe that Musk views support for autonomous vehicles from the Trump administration as a counterbalance to potential challenges in Tesla's EV business.
