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How will Tesla perform in Mr. Trump’s America?

Wednesday, November 9, 2016 14:00
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To say the results of the 2016 election were surprising is a gross understatement. That’s like saying the the national debt is rather a lot of money. What will a Trump presidency mean to Elon Musk and Tesla Motors? The answer is, it’s too early to tell. But we can make some (hopefully) educated guesses.

First and foremost, Trump is a champion of American companies providing jobs for Americans. Tesla has taken an abandoned factory in Fremont, California and turned it into one of the premier automobile manufacturing facilities in the world. And that’s just for openers.

Tesla has just announced it has acquired Grohmann Engineering, a highly respected German engineering firm located in in the city of Prüm near the border with Belgium and Luxembourg. With help from Grohmann, Musk wants to show the world how to increase production by a factor of ten by ‘building the machine that builds the machine’. That translates into higher productivity, something any businessman can understand.

Musk is committed to building a sustainable future while President-elect Trump is committed to a “Drill, baby, drill” mentality. Green Tech Media weighs in with the opinion that Trump will simply ignore the Paris climate accord and dismantle Obama’s Clean Power Plan. He undoubtedly will rein in the power of the EPA. What effect will that have on CAFE rules? We simply don’t know but no one should be surprised if vehicle efficiency targets for car companies become considerably watered down over the next few years.

Musk has always challenged the other car companies to build “compelling electric cars” but few have accepted the challenge. Most give the appearance of being dragged kicking and screaming into the zero emissions future while they continue to build every large truck and SUV they can weld, bolt, and screw together. One thing seems clear. Incentives for electric vehicles and for building a national EV charging infrastructure will likely be reduced in a Trump administration or eliminated all together.

That would not seem to be a major issue for Tesla Motors, whose current customers are mostly able to afford the products Tesla makes with or without incentives. But it could be an issue for at least some of the 373,000 Model 3 reservation holders. It is more likely that SolarCity’s rooftop solar business will be negatively impacted by a Trump administration. The President-elect has said publicly he doesn’t believe government should pick winners and losers in the commercial world. Utility companies may find it easier to resist encroachment on their business model from rooftop solar with Trump at the helm.

Elon told CNBC News on November 4 that he had hoped Donald Trump would not get the nomination and that Hillary Clinton’s climate policies were more in tune with his own preferences. He went on to say he now felt a bit stronger that Trump was “not the right guy.” (starting at the 5 minute mark in the video below) “He just doesn’t seem to have the sort of character that reflects well on the United States.”

Will Musk and Trump be able to do business? Trump has to be a big supporter of American business but for Musk, the idea of his zero emissions cars with electricity derived from burning more coal and more natural gas extracted from our national parks and public lands has to be a bitter pill to swallow.

For the moment, America has said it doesn’t give a damn about sustainability, even though 60% of people tell the pollsters that building a green economy is high on their wish list. For now, “cognitive dissonance” is the order of the day. The people have spoken and their message is they want good jobs and lots of them sooner rather than latter. A lot of people have taken Donald Trump at his word that he can provide for them.

It is doubtful that Trumps’ victory will impact the fate of Tesla Motors or SolarCity negatively. Tesla has too much momentum built up and solar power is poised to supplant fossil fuels and nuclear simply because it costs less. Solar won’t need incentives if it is cheaper than the alternatives. Now electric cars will need to get less expensive to appeal to mainstream buyers.

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