Can Trump Harm Tesla Stock by Reducing Subsidies?
While some are concerned that Tesla Motors Inc (NASDAQ:TSLA) might be harmed by an unfriendly White House and the potential reduction in federal subsidies, others are confident in the company, saying that the government subsidies aren’t as crucial to Tesla stock as the media makes them out to be.
First, some context: several web sites have cropped up, ostensibly playing watchdog to CEO Elon Musk’s companies but, in reality, they serve as thinly veiled salvos aimed at bringing down Tesla and SpaceX. They certainly make no attempt at subtlety, with names like “STOP ELON FROM FAILING AGAIN” and “Who Is Elon Musk.”
Most of the critics take issue with Tesla’s perceived reliance on government subsidies, often taking a libertarian view or a stance of similar substance. As pointed out by Quartz, many of these hit pieces—or even the sites themselves—are backed by powerful right-wing groups, which are usually considered the political faction most allied with the fossil fuel industry. (Source: “With Hillary Clinton out of the way, right-wing and fake news writers are going after Elon Musk instead,” Quartz, November 23, 2016.)
Some of these fake news pieces have even hurt Tesla stock in the past. And while some of the pieces on the these sites could be considered fair criticism, others have been thoroughly debunked or, at the very least, proven to be lacking balance.
For instance, while these pieces and sites generally hold an anti-government-handout line, they rarely turn the same level of analysis toward things like the International Monetary Fund (IMF) report that claimed that the fossil fuel industry received trillions of dollars in yearly subsidies. (Source: “Tesla received only a fraction of the subsidies the Big Three and oil industry have received,” Electrek, November 25, 2016.)
Which brings us back to Donald Trump. While the discussion rages between just how much Tesla does or doesn’t receive in subsidies, many are worried about the bottom line of Tesla stock under a Trump administration. While the president-elect has remained uneven on his views regarding climate change (hardly an irregularity for him), there is a risk of the Republican legislative, executive, and judicial branches causing problems for companies like Tesla—and its associated SolarCity Corp (NASDAQ:SCTY)—looking to sell solar panels and green-tech cars.
There is, however, hope on another front: the “Gigafactory” in Nevada. While Musk announced that a second such factory would be constructed in Europe, the first sits in Nevada and promises, in keeping with Trump’s plans, to help boost American production.
The Tesla saga is by no means written. The trolls, fake news sites, and fair critics of Elon Musk will continue to harangue the tech luminary while his supporters come out in his defense. What’s more important for Tesla stock and the company in general is the response to these challenges.
Editor’s Note: Hi, Stephen Karmazyn here. If you enjoyed this article, you can get more of my opinions and commentaries in our popular daily tech letter, Profit Confidential. Published daily, it’s FREE! Join us when you click here now.