A policy written for Elon Musk
Elon Musk until recently described himself somewhere in the middle of US politics and until very recently seemed to be anti-Trump. Yet in the 2024 presidential election Musk is said to have spent $175m supporting Donald Trump’s campaign. That is a tidy sum to help the owner of Truth Social, a direct competitor or X (Twitter), so Musk seems to have fully embraced Trump’s platform, but why?
On the surface, it may seem odd for Musk to back Trump given his pledge to terminate the “Socialist Green New Deal” which could be seen as a negative for Tesla, but this is more than offset by the pledge to cut regulation which “stifles Jobs, Freedom, Innovation and make everything more expensive.” This must appeal to Musk who regularly falls foul of the regulators and tests their patience.
One particular regulatory promise may stand out to Musk. To repeal Joe Biden’s executive order on Artificial Intelligence (AI) which Trump says, “imposes Radical Leftwing ideas on the development of this technology.” Musk’s own xAI business is developing fast and is now said to be valued at $40Bn, up from $18bn only 6 months ago. With less government interference it may be able to develop even more rapidly.
In addition to AI, Trump promises to expand “Freedom, Prosperity and Safety in Space”. Trump wants to create a robust industry in near earth orbit, send astronauts to Mars and enhance partnerships with the commercial space sector. This is music to Musk’s ears given that he wants to colonise Mars and that he founded SpaceX which manufactures rockets and owns Starshield (government communications) and Starlink (commercial internet).
Trump says he will reverse Biden’s attempt to boost the electric vehicle market which you might think is not good for Musk’s Tesla. However, there are plenty of other things in Trump’s platform that might compensate him. Trump promises to ban Chinese EVs from the US market entirely, at a stroke eliminating Tesla’s biggest competitors. Trump also plans tariffs on foreign made cars, another boost for Tesla, which makes its cars in California.
Trump promises to bring home critical supply chains. This could be beneficial to Musk’s Tesla if it creates a local battery industry and the critical minerals that go into battery production. This promise could extend to silicon chips and other components critical to Tesla, SpaceX, xAI, and one of Musk’s other companies, Neuralink.
Musk seems to have a promise of some sort of government job under Trump and there is also the promise of lower personal and corporate tax, but we should not view Musk just through the prism of his business interests. Musk is also a parent of 12 children and has taken a relatively conservative stance pushing back on “woke mind viruses” and “propaganda words”. He may therefore find some of Trump’s promises on education appealing like the promise to restore parent rights and the promise to cut funding for any school teaching critical race theory or “radical gender ideology”.
One area where Musk is influential but has less direct interest is cryptocurrency.
Trump explicitly states he wants to deregulate this area and for it to grow and develop in direct opposition to current SEC policy. While Musk may be less invested, Callanish Capital portfolios own Scottish Mortgage which has an investment in Blockchain.com and Blockstream. Scottish Mortgage is also a backer of Musk through its investments in Tesla and SpaceX.
Given the above outline of areas where Musk and Trump overlap it is perhaps surprising that Musk resisted Trump for so long. Maybe we should not be surprised though. Trump is often said to be a populist, and the beauty of a populism is that it has a broad intuitive appeal to everyone from the poorest to the wealthiest.
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