After saying he would not donate to Joe Biden or Donald Trump in the 2024 presidential election, Elon Musk has publicly endorsed Trump and is supporting him with millions of dollars reportedly donated to a political action committee.
The donations and support for Trump have led to some questions from investors and analysts given the former president's past criticism of Musk and the electric vehicle sector.
What Happened: Over the past several months, a relationship between Trump and Musk appears to have gained steam and may have led to the endorsement and reported donations to a new super PAC called America PAC.
Given past criticism of the electric vehicle sector and climate change, some are questioning Musk's reasons for his donation, which became a hot topic on a recent episode of "PreMarket Prep."
Co-host Aaron Bry said blue states (Democrats) are more likely to sign for energy storage initiatives than red states (Republicans), which could hurt a company like Tesla Inc TSLA.
Bry said that states could be mad at Musk for his political donations and they could stand in his way and his company's way in the future.
"It does not make sense to me from a business decision," Bry said.
Bry said red states taking money from the oil and gas industry are not going to be that friendly to Tesla and the electric vehicle sector.
"PreMarket Prep" co-host Dennis Dick remarked that this was a valid argument, suggesting Musk might be burning his bridges for the future. He added that Musk likely already has support from blue states for his EV initiatives.
"Burning his own blue bridges to try to pick up the red bridges," Dick said.
Dick said that Musk might be trying to win over everyone and time will tell if it's the right move.
"(He's) playing a game of Monopoly and wants to own all the property."
Dick said it doesn't hurt for Musk to be on the good side of the president. "I don't think it hurts if he thinks Trump is going to win."
The biggest future hurdle for Tesla's robotaxis is likely to be regulatory, Dick added.
Deepwater Asset Management analyst Gene Munster said Musk's endorsement of Trump could influence Tesla's future.
"The endorsement, while it was predictable and obvious, it does hold some weight if (Tesla) can get a favorable environment around the government," Munster said in a CNBC interview.
Munster said Tesla having a favorable government environment could help with full self-driving (FSD) deployment.
Why It's Important: The new PAC is focused on registering voters and mail-in ballot efforts in swing states, according to the report. The new monthly donation report follows a Bloomberg report that Musk had donated to America PAC recently.
Musk shared an image on X calling The Wall Street Journal report of the $45 million donation as "fake gnus."
In March 2024, Musk said he would not make any financial contributions to either Trump or Biden.
"Just to be super clear, I am not donating money to either candidate for U.S. President," Musk previously tweeted.
While Trump has publicly criticized the electric vehicle industry, Musk has stated that the former president is a supporter of electric vehicles. Trump has also been reported to be cozying up to the oil and gas industry, a sector that some investors see winning with a Trump return to the White House.
Musk publicly praised the selection of J.D. Vance as Trump's vice-presidential pick Monday.
"Excellent decision by @realDonaldTrump," Musk tweeted.
Musk also said that Vance was a "great choice" in a reply to a post by David Sacks.
The support of Vance as a selection comes as Electrek points to the Senator being behind the Drive American Act that would increase prices for electric vehicles and offer incentives for Americans to buy American-made gas-powered and hybrid vehicles.
Trump and Musk have not always had a positive relationship, with Musk criticizing the Truth Social platform that is owned by Trump Media & Technology Group DJT. Trump also previously targeted Musk, saying that Tesla cars don't drive far enough and cause crashes and SpaceX has rockets that go nowhere.
Musk previously served on Trump's advisory council, but dropped out after Trump announced the withdrawal of the Paris Agreement.
"Climate change is real. Leaving Paris is not good for America or the world," Musk previously said.
Electric vehicle media outlet Electrek has been critical of Musk's support for Trump, which comes as Tesla has a mission to "accelerate the world's transition to sustainable energy."
"Missions are opposed by the Republican Party platform Musk is donating to," Electrek writes.
Trump recently praised Musk in a speech while also attacking the electric vehicle sector a few days later, criticizing a lack of chargers and blaming electric trucks as the reason to fix bridges across the country.
Wedbush analyst Dan Ives recently highlighted that a Trump win in the 2024 election could help Tesla.
"We believe a Trump presidency would be an overall negative for the EV industry as likely the EV rebates/tax incentives get pulled, however for Tesla we see this as a potential positive," Ives said.
The analyst said Tesla has a scale and scope unmatched in the sector, and the company can operate in a non-EV subsidy environment. Higher China tariffs, which could be pursued by Trump, would also hurt Tesla’s electric vehicle competition.
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