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What Elon Musk should say to Donald Trump
Donald Trump is a tanker. The former president gushes about fossil fuels It is rails against alternative energy. Trump promised to limit or even stop sales of electric vehicles if he is elected to a second term in this year’s presidential race, as if he could turn the clock back a decade or two.
A possible new Trump adviser – Tesla CEO Elon Musk – could help Trump renew his thinking. The Wall Street Journal recently reported that the two men established a kind of alliance, with Musk possibly taking on an advisory role in a second Trump administration if Trump wins this year’s presidential race. Musk is a polymath and the Journal suggested he could offer Trump ideas on border security and data analysis. But Musk could certainly also correct some of Trump’s misunderstandings about EVs.
Musk and other automaker CEOs may applaud Trump’s deregulation plans, but none of them are pushing for Trump to phase out EVs. Automakers have already spent billions developing EV technology, with another Around US$1 trillion in investments planned by 2030. This is a huge amount of spending aimed at transforming and modernizing one of the largest industries in the world.
The pace of EV sales has slowed down recently, but that doesn’t mean the technology is a fad. EVs are still more expensive than traditional gas-powered models, and range limitations still scare off buyers who don’t live near robust charging networks. EVs are still in their infancy and advances are likely to emerge that reduce costs, extend range and make EVs appealing to a much wider range of drivers.
There is a sinister political logic behind Trump’s crusade against EVs. Trump reportedly made a direct approach to fossil fuel executives, asking them to raise $1 billion for his 2024 campaign in exchange for carbon-friendly policies during a second Trump presidency. The assumption is that limiting EV sales will make Americans buy more gasoline and benefit fossil fuel drillers, who in theory would sell more product.
But this is a narrow, American-only view that does not take into account what is happening in the rest of the world. Climate change and global warming are forcing decarbonization everywhere, and the big American companies that Trump seeks to capture don’t just operate in the United States.
Exxon Mobil, Chevron, ConocoPhillips and the like should orient their businesses to what is happening everywhere and not to what a particular American president might prefer. Same for all major automakers. While these corporate giants want to extract as much profit as possible from legacy businesses, they also want to profit from future opportunities such as carbon capture, EV mineral miningIt is whatever fuels vehicles 50 years from now.
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Elon Musk, center left, and Wendell P. Weeks, center right, listen to then-President Donald Trump, right, as he meets with business leaders at the White House on Monday, Jan. 23, 2017, in Washington , DC (Matt McClain/The Washington Post via Getty Images) (The Washington Post via Getty Images)
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Fossil fuels will be around for a long time, but they serve the industries of the past. EVs and renewables are industries of the future, with fortunes to be made by companies that make the right bets. They are among the 10 industries that China considers pillars of national strength, worthy of special treatment. And China leads, for now, in development of affordable EVs.
The mercurial Musk actually supported Biden and his green energy agenda when Biden took office in 2021. But when Biden began promoting electric vehicles, he often excluded Tesla, a non-union automaker, instead extolling General Motors and Ford, which are unionized, but are far behind Tesla in EV technology.
Musk got angry and lately became a prominent Biden critic. In an April tweet, he described Biden as “a tragic front for a far-left political machine.”
Musk could tell Trump a thing or two about EVs and green energy. First, although the United States is the largest market for Tesla’s electric cars, China is second and Europe is third. International markets are crucial to developing the scale necessary to become and remain profitable. Trump could change rules in the United States to favor more gas burning, but other markets would continue to push for greater EV adoption to meet their own pollution and emissions targets. It would be harmful for some North American companies to establish North American standards that are very out of sync with those of other countries.
Second, virtually no one bought a Tesla because the government forced them to. Teslas are premium cars that buyers pay for because they want to own one. EVs have an appeal that goes beyond their ecological compatibility.
Finally, investors rewarded Tesla for its leadership role in an industry of the future, bidding sky-high and making Tesla one of the most valuable companies in the world. Tesla has benefited from government subsidies aimed at accelerating the adoption of electric vehicles, but it has also done well when these subsidies have expired for Tesla and other automakers that hit certain sales targets. Tesla is a market success, not a government lapdog.
Biden, for his part, has a different angle on auto industry policy. He sanctioned huge incentives for green energy production, some of them dependent on the hiring of unionized workers. He sided with striking automakers last year and appeared at a picket line in Michigan. Most recently, he imposed a 100% tariff on Chinese-made EVs, which is largely aimed at keeping them out of the U.S. market completely and protecting American jobs.
Both Trump and Biden know they need to win the Rust Belt states of Pennsylvania, Michigan and Wisconsin to receive this year’s presidential prize. The battle for EVs is really a fight for blue-collar votes in swing states. Someday, though, your EV won’t be a political statement, but just a car.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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