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CNN
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No business leader has done more to support former President Donald Trump’s candidacy than Elon Musk. But the billionaire and his business empire are facing both positives and negatives after Trump regained the presidency in Tuesday’s election.

Musk has so far donated nearly $119 million to a political action committee he founded to support Trump, Federal Election Commission filings show. He has appeared alongside Trump at rallies and hosted a compelling interview with him on X, his social media platform.

‘He has put in a lot of effort here. He has gone off the deep end in this election,” said Daniel Ives, technical analyst at Wedbush Securities.

Early Wednesday, investors were already betting that Trump’s victory would also be a victory for Musk’s largest public holding company, Tesla (TSLA), sending his electric vehicle maker’s shares immediately up 13% at market open and leaving regular trading would rise almost 15 percent. %. That increased the value of the 411 million shares of Tesla that Musk directly owns by more than $15 billion, representing a 12.761% return on the $119 million he gave to Trump. It was a two-year high for Tesla shares, which have struggled recently and were up just 1% for the year through Tuesday’s close.

But there are risks for Tesla even from Trump’s victory.

Much of Musk’s enormous net worth can be traced to the government support his companies, such as Tesla and SpaceX, have received over the years. Even if Vice President Kamala Harris had won, much of that money would have continued to flow. But even if some government support for electric vehicles is now curtailed or ended, as is likely with Trump’s victory, Musk’s wealth will remain firmly intact. Tesla could even benefit if government support for electric vehicles ends.

Musk posted numerous tweets on his social media platform X late Tuesday and early Wednesday celebrating Trump’s victory.

“The people of America gave @realDonaldTrump a crystal clear mandate for change tonight,” he wrote in one.

Trump is openly hostile to electric vehicles, saying they are too expensive, have limited range and will destroy jobs and the American auto industry. But what might seem like the biggest blow to Tesla of another Trump presidency — a reduction, if not the end, of federal support for electric cars — might not be so bad for Tesla and Musk.

But other policies central to Trump’s plans could cause major problems.

Trump has vowed to end something he’s calling “Biden’s EV mandate,” even though no such mandate exists, and it’s unclear what he’s referring to.

But under Biden, there has been significant government support for building and buying electric cars, including billions of dollars in loans to encourage automakers to invest in factories to build electric cars and batteries in the United States, support for charging stations and a tax break from $7,500 for many electric cars. car buyers.

Many industry experts believe that Trump will end these programs. Trump could direct the Treasury Department to change the rules governing when car buyers qualify for the credit, significantly limiting the tax credit’s availability. Or, if Trump has a Republican-controlled Congress, he could pass legislation to eliminate the credit altogether.

But Musk has said he isn’t concerned about the end of the tax credit because Tesla sees it as a boon to legacy automakers. efforts to enter the EV market and bring more competition.

“Take away the subsidies. It will only help Tesla,” Musk wrote on X in July.

Thanks to increased competition, Tesla’s global sales fell 2% in the first nine months of this year compared to last year. Sales and profits managed to improve in the third quarter, but it was the first time in its history that the company had ever experienced such a decline.

It’s more likely that Trump will greenlight Musk’s true self-driving vehicles, which have yet to be created. Ives said he would work with a fleet of so-called ‘robotaxis’ to provide rides without any form of driver on board.

Garrett Nelson, an analyst at CFRA Research, agreed.

“In our view, Tesla and CEO Elon Musk may be the biggest winners from the election results, and we believe Trump’s victory will help expedite regulatory approval of the company’s autonomous driving technology,” he said in a note on Wednesday to his clients, in which he put forward his recommendation. on Tesla stock from a ‘Hold’ to a ‘Buy’. He raised his price target for the next twelve months by $110 to $375 per share.

So far, the company’s existing driver assistance features, known as Autopilot and Full Self-Driving, or FSD, are facing investigations from federal safety authorities after a series of crashes involving the technology. These studies could delay the adoption of truly self-driving Tesla cars on the road, despite Musk’s widely reported claim that Teslas using FSD are already safer than cars driven by humans.

“Under Trump, those investigations could slowly disappear,” Ives said.

It’s not likely that all government support for electric vehicles will disappear during the next Trump administration. In addition to the tax break for buyers, much of the taxpayer money spent to support electric vehicle adoption comes in the form of government loans to automakers and their suppliers to build factories in southern “red” states. It’s not likely that Trump would want to cut that support and the promise of jobs in those states, even if they ultimately provide competition for Musk and Tesla.

Traditional automakers say they will move forward with their plans to build and sell more electric vehicles in the future. They say electric vehicles are the future for the industry, even though adoption rates have slowed recently.

“It’s not a strategy where we’re going to obstruct the presidential election or the next election and see what we can get away with with the EPA,” Ford CEO Jim Farley told investors in July. “The only way we believe we can be sustainable is by making money from small electric cars. And that is our guess.”

Automakers are scrambling to sell more electric vehicles so the companies can comply with increasingly strict environmental regulations in the United States, Europe and Asia. Even if Trump gets the EPA to change emissions rules here, automakers will continue to have an incentive to keep making electric vehicles to meet regulations elsewhere, or stricter environmental regulations in many US states, including California, which has its own stricter has emission regulations, followed by many other states. .

Industry experts say they don’t expect growth in electric vehicle sales to stop even if Trump changes emissions rules, partly due to growing consumer demand.

“We may see much slower adoption of electric cars (with a change in regulations),” said Jeff Schuster, global head of automotive at GlobalData, an industry consultant. “But despite all the investments, it is unlikely that this will be reversed.”

The bigger problem for Tesla with Trump’s victory is that a new trade war with China could erupt, Ives said, given the importance of its Shanghai factory to its global sales and profits.

With Trump’s victory, “he will be much tougher on China, and then the negatives could outweigh the positives for Tesla,” Ives said. “More than 40% of deliveries come from the Chinese market. Tesla would be caught in the crossfire.”

And it could also be a problem for Tesla if Trump taps Musk to lead his administration’s efforts to cut what they call government waste, as the two mentioned during their campaign.

Whatever the outcome of these efforts, and whether or not Musk has a formal or informal government role in Trump’s new administration, the last thing Tesla investors would want to see is Musk being further distracted from his time at running Tesla, Ives said.

“It’s more time away from Tesla, at a time when you want more attention for Tesla,” Ives said.

Less impact on SpaceX and X

Musk’s other major corporation, SpaceX, would likely not have had a significantly different relationship with the federal government regardless of who is elected. Its main competitor, Boeing, has serious problems with spacecraft that NASA contracts to transport astronauts to and from the International Space Station.

And Musk’s ownership of X has been widely criticized, especially by Democrats, for spreading misinformation. But it has not been halted or hampered by government action even under Biden, and the new Trump administration is unlikely to take action on it either. And given the financial losses since his purchase of the company, this is now a relatively small portion of Musk’s total wealth.