Earth’s Richest Man Now Even Closer to the Most Powerful Country’s Office
- Elon Musk is supporting Donald Trump’s bid for office as his victory could benefit Tesla
- Musk’s place in a potential Trump Cabinet is unclear but could be extremely influential
- Can the wealthiest man in the world become the most powerful man in the world?
The CEO and spiritual leader of the automaker Tesla (NASDAQ:TSLA) is the world’s richest man. With a net worth of over $260 billion at the time of writing, Elon Musk is about as wealthy as a medium-sized country. His business exploits span automotive, aerospace, and neural technologies as well as robotics, artificial intelligence, transportation, renewable energy, and even social media.
He’s recently taken a liking to the republican party presidential nominee Donald Trump. A potential partnership between them in the upper echelons of United States government can have immense repercussions for the economy and perhaps even the world.
Nothing Personal
- Musk supports Trump because a republican president could be good for his businesses.
Elon Musk has not always been supportive of Donald Trump. During the 2016 presidential election in the US, he was even skeptical of the republican candidate’s abilities. This changed over the course of the last two terms as the ruling democratic party became increasingly committed to cracking down on US tech companies such as Tesla and SpaceX.
Investigations into the billionaire’s companies were launched over alleged labor practice and environmental compliance violations. And while the democratic party is notorious for its heightened scrutiny of large companies, Musk had no intention of letting that ‘overregulation’ slide.
Reinstating now former president Trump as an active user on X was the first instance of Elon extending an olive branch to the republican side. Musk has virtually no other choice but to double down on his support for the candidate whose party can potentially alleviate some of the regulatory pressures he’s facing from the current office.
Trump and Musk have a lot in common, it turns out. Both men support a hands-off approach to capital markets with minimal government intervention. They also stand side by side when it comes to energy independence, free speech, tax reductions, international trade policies, tech developments, and as of recently, cryptocurrencies.
The Emerging American Oligarchy
- Elon has contributed $132 million to the republican campaign
- He has plans to cut $2 trillion of government spending from the upcoming budget
- Could potentially be appointed in a high Cabinet position, which can create a conflict of interest
Elon’s contributions to the republican campaign which started in May of this year add up to about $132 million, according to Fortune. This makes him one of the largest donors and, by extension, one of the biggest supporters of Donald Trump’s reelection bid. This has resulted in numerous talks and speculations about the possible position the tech entrepreneur might occupy at Trump’s side.
In all probability, he could head a “Department of Government Efficiency”, which Trump himself pledged to establish. Elon himself has expressed his disdain for the current state of the American economy, claiming that inefficiencies, particularly in programs such as Medicare and social security, could be eradicated, which would free up some $2 trillion from the upcoming budget.
For comparison, the US government spending as a proportion of the annual gross domestic product hovers around 24% at the time of writing. The GDP itself is at $29 trillion, which would put the government’s contribution at around $7 trillion for the year. If Trump serves another four-year term, then Musk could theoretically save more than a year’s worth of federal spending in total - $8 trillion.
That’s one scenario. Another one would be for Musk to become a personal aide to Trump or occupy an advisory position for all things tech and innovation. That could be particularly useful as the country is positioning itself to be a technological leader in both artificial intelligence and digital assets such as cryptocurrencies.
At any rate, the South Africa-born billionaire could potentially land a cushy position in Trump’s future Cabinet. A CEO of a big company getting so close to the executive branch of government wouldn’t be alarming under normal circumstances. But as it stands, he also happens to be the richest man in the world, and that comes with some risk.
If the wealthiest person on the planet is capable of directly or indirectly swaying economic policy in the most powerful economy in the world, one might be forgiven to think there’s a conflict of interest.
Elon Trades
- Tesla’s price could potentially skyrocket with 77% if Trump is elected
A conflict of interest might even be an understatement seeing as how two billionaires have the clout, wealth, and political influence to direct the country’s economy. So, what’s the bottom line for America? Which industries will flourish, and which will wither?
Elon Musk spearheads the world’s largest electric vehicle company. It’s safe to say that any kind of competition in the field, especially from Chinese government-backed companies will be frowned upon and taken with a certain dose of hostility. Cheaper EVs can stunt growth in Tesla as people are buying more affordable alternatives.
That’s not something Musk would want, seeing as the company’s performance has been marred with decreased demand, increased scrutiny, increased competition and delays connected to its Cybertruck line. At the same time, Trump is a champion of protectionist policies that benefit domestic businesses at the cost of foreign imports.
One of the first things A Trump-Musk cabinet might do is not only reduce taxes and regulation in the automotive industry but double down on tariffs on EV imports from China, in line with both of their agendas. This could significantly boost domestic automakers’ attractiveness as consumers substitute foreign vehicles for their own.
If people are buying local, what could that mean for the share price of Ford (NYSE:F), Stellantis (NYSE:STLA), and General Motors (NYSE:GM)? Better yet, what could it mean for the de facto leader in electric cars Tesla?
Although their domination of the EV market has subsided in the past couple of years, it still sells more EVs than any other auto manufacturer in the US with a 48% market share at the time of writing. Do you think that number would increase if there was no foreign competition?
Wall Street analysts have set a modest ‘high’ price target of $310 a share for the EV maker, which would correspond to a 24% jump from current prices. And if the bull run were to continue thanks to a steady stream of good news and corporate tax cuts, the previous all-time high would be in sight.
As with both stocks and indexes during uptrends, Tesla could notch a higher level than the previous peak during its price discovery. That could correspond to an even higher 77% gain from its market price to $440 per share. And that could be just the beginning.
If Elon’s companies are so pervasive, would his gains be limited only to Tesla? If he is an innovation leader in battery technology, solar power, robotics, automotive and aerospace, could he receive government contracts in these areas?
SpaceX has already proven how one man with conviction can outperform a multi-billion-dollar government behemoth such as NASA. Now imagine if that same man is in the driver’s seat of the United States of America. Does 77% still seem like a far cry?