Elon Musk’s Trump Alliance Indicates Great Things for Tesla Stock

elon musk teslaTrump and the Future of Elon Musk’s Tesla 

While the current U.S. presidential administration led by Donald Trump has defied many norms since it came into power, one of the more surprising developments has been the Elon Musk Trump relationship.

One of them is a tech luminary bent on saving the world from environmental degradation, artificial intelligence (AI), earthbound living, and a whole host of other potential existential threats to humanity. The other has been off to one of the rockiest—and at times most bizarre—presidencies in living memory.

And yet, Musk has become a strong presence on Trump’s Business Advisory Council, along with many other tech bigwigs. And this has been good news for Elon Musk’s Tesla Inc (NASDAQ:TSLA), and for Tesla stock.

The TSLA stock price has risen by more than 30% since the new year. The Elon Musk Trump couple makes strange ideological bedfellows, but investors could not be happier with how the company has performed since the presidential election.

Trump and Musk may not share many positions politically, but they do have one thing in common: a love of American entrepreneurship. Trump dedicated much of his campaign to bringing back well-paid blue-collar work to the country and to protecting American jobs. Elon Musk’s Tesla ticks a lot of those boxes.

A fast-growing and largely American-based auto manufacturer, Tesla primes itself as the vehicle of the future all the while reinvigorating a U.S. industry long thought lost to more competitive wage levels in other countries.

Despite many departures on issues such as climate change (Trump has previously tweeted that it is a hoax manufactured by China) and the recent immigration ban that the president issued, Musk’s role as adviser to Trump is seen by many analysts as good business.

Is Tesla Affected by Trump Policies?

While Tesla has seemingly benefited so far from a Trump White House, the ways that TSLA stock may be impacted in the future are numerous and could result in a multitude of different outcomes.

First, there’s the optics of the relationship. Musk has crafted an image of himself in the public consciousness as a man of the future, a harbinger of technologically progressive change. Solar panel roofs, cars that drive themselves, putting humans on Mars; all these and more are projects that Musk hopes to see completed via Tesla, SolarCity Corp (NASDAQ:SCTY)—of which Tesla is the parent company—and SpaceX, an aerospace manufacturing company that Musk also heads.

We can assume that many of those who buy solar panels and Tesla vehicles tend more towards the left side of the political spectrum. As such, those with a more environmentally-focused mindset have naturally been taken aback by the Tesla CEO’s support of Trump and his anti-global warming tendencies.

“[Elon Musk] sees himself as kind of a voice of reason,” said Musk biographer Ashlee Vance in a Bloomberg interview. Vance offered that as a response to Musk fans who may be offended by his closeness to the divisive President Trump. Vance said that Musk probably believes he could present different perspectives to the president on a variety of issues, from global warming to manufacturing.  (Source: “Elon Musk’s Influence on President Trump,” Bloomberg, February 10, 2017.)

Ultimately, Vance described the relationship as a child of pragmatism.

Which also makes sense for Tesla stock. After all, Tesla is partly fueled by $2.391 billion in government subsidies. Over half of that subsidy—$1.29 billion—derives from Nevada tax incentives for Musk’s ambitious “Gigafactory,” and are primarily comprised of tax breaks over a 20-year period. The Gigafactory is a massive lithium-ion battery facility currently under construction. (Source: “Complete breakdown of the $4.9 billion in government support the LA Times claims Elon Musk’s companies are receiving,” Electrek, June 2, 2015.)

Musk hopes that the factory will become the prototype for a number of similar plants that will help Tesla reach its lofty projected production numbers.

And that’s just accounting for Tesla; SolarCity takes in about $2.5 billion from the U.S. government via subsidies, tax exemptions, and other deals.

Which is to say that Elon Musk—and TSLA stock investors—have a vested interest in cozying up to elected officials.

Another note of interest is businessman Peter Thiel’s presence in the administration. Thiel and Musk were both involved with Paypal Holdings Inc (NASDAQ:PYPL). Thiel’s close proximity to the president places a Musk-cheerleader in a position that could help not only maintain the Elon Musk Trump dynamic, but strengthen it.

Trump crafting policies while both Thiel and Musk are nearby could spell out huge gains for TSLA stock. The question is of course how much of those policies will be influenced by Thiel, Tesla, and Musk.

Musk’s detractors, meanwhile, view his position on the council as signs that he is the beneficiary of crony capitalism. (Source: “Trump is turning Elon Musk into a crony capitalist,” The Verge, February 6, 2017.)

                                     Tesla Stock Chart Since U.S. Election

Tesla stock chart
Chart courtesy of StockCharts.com

And we haven’t touched on the substance of Trump’s future policies, with everything from the immigration and travel ban, to the Mexican border wall, to the “America First” economic plan possibly sending ripples through Tesla stock.

Speaking of the immigration ban, Musk recently took to “Twitter” to explain how he pushed the topic of the controversial executive order to the top of the agenda in a recent meeting. The note was in part a response to those who had criticized his presence within the Trump administration, exemplifying how he can create change from within.

The point is that we will definitely see Tesla affected by Trump policies; the more salient questions center on what those policies will entail and the extent of their impact.

On the Horizon for Tesla

TSLA stock had a weak 2016 but, with a friendly president, the Tesla stock chart may only be moving up.

The company’s stock fell by nearly five percent last year, mainly due to a large drop-off in value in February 2016, which saw share prices sink to the $150.00 levels. Since then, however, the stock has eclipsed $280.00 per share.

And 2017 is set to be a hugely important year for Tesla.

Trump’s first couple of years in office will oversee some of Tesla’s most ambitious plays. The “Model 3,” the most affordable Tesla to date at an expected $35,000.00, is currently slated for a March 31 release.

The Model 3 is meant to be the consumer breakthrough vehicle for Tesla, driving the company out of the garages of the upper-crust and into middle-class neighborhoods. It is precisely this reason that Tesla put its delivery numbers at 500,000 in 2018, compared to the 76,230 cars delivered in 2016.

Despite projecting a more modest figure compared to the half-a-million set for 2018, the company still fell short of the 80,000 to 90,000 it said it would deliver last year. (Source: “The Surprising Reason Tesla Could Jump 25%,Barron’s, January 19, 2017.)

Tesla has not exactly cultivated a reputation for always hitting its numbers and world-altering goals, but the company has often managed to remain strong throughout, based on steady progression and the indomitable personality of both the brand and its CEO.

Whether the company hits its goals is very important for TSLA stock in the short term but, if the company can manage to roll out the Model 3 and keep the vehicle affordable, there’s reason to believe that Tesla stock will surge in the long run.

Combine this with all of its plays in the automated driving market, home battery systems, and—through SolarCity—the production of solar panels that are cheaper than regular roofing materials (even before you account for energy savings), and you have a lot of fingers in a lot of pies, any of which could turn out to be delicious for Tesla bulls.

The company, in fact, cannot help but make headlines. A recent MotorTrend piece tested the 2017 “Model S P100D” and found that it was the fastest production car they’ve ever tested to reach 0-60 mph at 2.28 seconds. (Source: “2017 TESLA MODEL S P100D FIRST TEST: A NEW RECORD — 0-60 MPH IN 2.28 SECONDS!“) MotorTrend, February 7, 2017.)

Does all this good press mean that Tesla is a sure thing? Of course not. The company certainly has a lot going for it beyond Trump, but a friendly head of the White House willing to heed the CEO’s advice is definitely not going to hurt.

On the negative side, you have recent rumblings over workers’ treatment at Tesla after an employee wrote in a blog post about allegedly long hours, mandatory overtime, and resultant preventable injuries. (Source: “Elon Musk in union spat after wrongly calling Tesla worker a paid agitator,” The Guardian, February 11, 2017.)

How the spat between Musk, his workers, and the potential unionizing of Tesla producers plays out will carry ramifications for the stock. But, between the Trump bump and some of the exciting technology that Tesla plans to roll out in the near future, you’re left with a company that has a lot to look forward to in 2017, despite possible misgivings.

Elon Musk, Trump, and the Future

Here’s the thing; you’d be hard-pressed to dream up a company better situated to capitalize off of a Trump White House. An American business magnate and entrepreneur with a company that employs 25,000 U.S. workers and is building what could be the largest factory in history (we all know Trump loves big buildings) is what may make this pairing, despite all odds, a match made in heaven.

Sure, there’s a bevy of political differences. And the scope of Elon Musk’s influence over Trump has yet to make itself known, but there’s reason to believe that the two will enjoy a healthy relationship, at least if Tesla can still keep contributing toward the U.S. economy in ways that make Trump happy.

The future of TSLA stock could be brighter than it’s ever been, and bizarrely enough, that’s due in no small part thanks to Trump.