Tesla and Trump: Elon Musk directly confronts some wrongheaded assumptions [Video]

Posted on November 18, 2016 by Matt Pressman

Can Tesla survive a Trump administration? Guru Focus reports, "With the election over and a new president chosen, how can Tesla [NASDAQ: TSLA] benefit from the new agenda? The Nasdaq and tech stocks in general have been hurt as opposed to financials; investors are assuming that industrials and oil companies will prosper under the new administration. One stock that has been falling fast would have to be Tesla. It is lumped into the tech field of stocks, but is it really? If you don’t know the company, you wouldn't know that its plan is to function as an industrial." 

Above: Tesla Model S vehicles in red, white, and blue (Image: Wikipedia)

An industrial? One could argue that, "vehicles are not going to be the highest margin portion of Tesla’s operations; it’s the industrial [stationary storage] batteries that can be applied to manufacturing that will either make or break the company." And remember — at Tesla’s 2016 annual shareholder meeting, Musk said half of the company’s batteries will go toward electricity storage for the power grid rather than Tesla’s vehicles in the coming years as Tesla expands its battery business.

Above: Powerpack stationary battery storage from Tesla (Image: Tesla)

Bloomberg also argues that, "Trump can't kill the electric car... [as] oil prices will likely rise again — especially if, say, a more-hawkish Trump foreign policy leads to renewed sanctions on Iran." And policies abroad (and in California) could continue to benefit Tesla as: "other regions, especially in fast-growing Asian markets such as China and India, have reasons of their own to demand more efficient vehicles, ranging from heavily polluted cities to national security (why embrace ever-increasing dependence on foreign oil?). Don't forget, also, that roughly one of every eight new U.S. vehicle registrations is in California, which is allowed under the Clean Air Act to set more stringent fuel-efficiency targets than the feds."

Above: "Refueling" with cheap electrons looks better and better as gas prices rise (Image: Inhabitat)

Nevertheless, the manner in which some on Wall Street seem utterly convinced that Trump's stance on subsidies will somehow destroy Tesla should be openly questioned. Yesterday, after Tesla announced approval of the SolarCity merger, Musk directly addressed concerns about the "new political landscape" and the wrongheaded assumption that Tesla relies on subsidies. At 1 minutes and 56 seconds into the video, Elon Musk's first question relates to the new Trump administration — the question is: "Given the new political landscape, what changes if any will we see with Tesla strategy?" Musk responds, "Let's say the new President did erase all incentives, Tesla's competitive position would just be better." Musk's full answer (see below) certainly sheds light on the misconceptions about subsidies and their impact on Tesla's business...

 

Above: Musk takes questions after the Tesla and SolarCity merger is approved — his first question (at 1 minutes and 56 seconds into the video) relates to Tesla's reaction to the new Trump administration (Youtube: Every Elon Musk Video via Tesla)

And with Trump's emphasis on U.S. manufacturing, Autos Cheat Sheet argues that: "Tesla’s impact on U.S. manufacturing [is] growing by the day... Tesla offers an example of how a mid-21st-century American business might look. By focusing exclusively on electric cars, solar power, and energy storage, the Palo Alto-based company planted its flag in the future. Unsurprisingly, the effort involved the creation of thousands of manufacturing jobs. From a rapidly expanding automotive plant to the world’s largest battery factory now in the works, Tesla is officially a force in the new economy out West... [and] on the East Coast. In mid-October, Tesla announced it would collaborate with Panasonic on the production of photovoltaic cells and modules for solar installations in a Buffalo [SolarCity] facility."

Above: Workers at the Tesla Fremont factory (Image: CNET Roadshow)

So although Tesla is up against a new administration in opposition to clean energy, the company's strong push into the industrial sector (via grid battery storage), a potential for oil prices to rise, its overblown reliance on subsidies, and its leadership role in U.S. manufacturing might actually prove advantageous in the coming four years. Hard to tell. Another encouraging possibility could come from having Peter Thiel, Musk's old PayPal business partner and ally, close to the Trump administration. As Bloomberg remarks, "Tesla's future in Trump's world [might mean that] Elon Musk is up against a starkly different agenda, but the energy transition he invigorated can’t be stopped."

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Posted in donald trump, Electric Vehicles, Elon Musk, Peter Thiel, Tesla, tesla news, TSLA


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