Trump Will Short Term Help, Long Term Hurt Elon Musk and Tesla (TSLA)

By Austin Smith Published Nov 23, 9:01AM EST

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Trump Will Short Term Help, Long Term Hurt Elon Musk and Tesla (TSLA) — © 24/7 Wall St

Key Points:

While customers hurry to buy before the EV tax credit expires, its possible withdrawal could momentarily increase Tesla’s (NASDAQ: TSLA | TSLA Price Prediction) sales
This short term sales bump would come at the expense of the long term viability of the company
Elon Musk might advocate for changes to offset the loss, including refunds or including the tax credit amount into Tesla’s pricing.
Also: Tesla has made early investors millionaires, and ‘The Next Nvidia’ stocks could do the same. Click here to see why.

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Transcript:

[00:00:00] Doug: So we have an interesting, situation. Obviously Elon Musk and president Trump are friends.

[00:00:08] Lee: Very good.

[00:00:09] Doug: Elon Musk owns the largest EV company in terms of sales in the United States, they have 50 percent of the market, but there’s speculation that the new administration will take away the EV tax credit because they don’t like EVs.

[00:00:27] Doug: They don’t, I guess they don’t see their purpose. Now. Long term, this has to hurt Tesla, unless I’m missing something, because a lot of people buy an electric car because they get that big credit. It, in essence, brings the purchase price down. But, if people hear it’s going to go away, There may be a burst of sales, you know what I’m saying?

[00:00:49] Doug: I mean, you may have this People say I got to get this while the getting’s good

[00:00:55] Lee: Before things change,

[00:00:56] Doug: Right? But then when things change given how weak the ev market is you could literally just have it go It’s coming across and that’s rude. I mean, so what do you think does that sound right?

[00:01:08] Lee: It does to me.

[00:01:10] Lee: I mean, people are rushing to the border to get in before, before things change. So yeah, I think it’s going to have a big impact. Now, I think what could be interesting is perhaps. Musk will lobby President Trump to somehow massage it into the cost, or, perhaps that’ll be it. I mean, it’s not a huge amount compared to the price of the car.

[00:01:38] Lee: It’s about eight percent, right? the EV tax credit or the price of the car.

[00:01:43] Doug: I think the answer to that is Yes, but if you look at a gas powered car versus an EV, the price difference on average is about 10, 000.

[00:01:52] Lee: Oh, absolutely. Absolutely.

[00:01:54] Doug: If you’re going to buy a new car, okay, the tax credit is probably something you take into account.

[00:02:01] Lee: Yeah. Well, either way, I think you’re, right on two levels at a, people that are gonna buy one and there’s incentives because, hey, the inauguration day is January 20th. So you have about six more weeks. So maybe, potential buyers flood to the Tesla showrooms and be. maybe between now and, the inauguration, which again is about two months, maybe, must configure out a way to somehow massage that or smooth it into the purchase price or maybe a rebate could be possible.

[00:02:36] Lee: Something along those lines.

[00:02:38] Doug: Well, there’s something I, and this is, doesn’t have to do with. People buying these cars, the government owns a hundred thousand cars,

[00:02:48] Lee: Right.

[00:02:49] Doug: And the plan was the biden plan was is to basically have that fleet Be all electric by 2035 now, it could be all electric, all Teslas, it’s so it’s not as if the administration couldn’t push some sales in Tesla’s direction.

[00:03:09] Lee: Oh, absolutely. And, you would think given the incredible impact that Elon Musk has had upon, the administration, um, Yeah, I, get the sense that some way or another, he’s going to work this out and the sheer boon he’s got to his net worth, which went from like 200 and, 48 million to 270 million or billion, after the election, he’s probably thinking about a way he can work around it or, get it sorted out.

[00:03:42] Doug: I have to tell you something. I think Tesla is a buy. I think that President Trump is not going to make Musk’s life difficult. So I believe that something is going to happen that favors Tesla here. It would be speculation to say what, but I don’t think somebody helps you that much, puts way over a hundred million dollars into your campaign, and then they say, sorry, I’m going to wreck your business.

[00:04:15] Lee: Well,

About the Author Austin Smith →

Austin Smith is a financial publisher with over two decades of experience in the markets. He spent over a decade at The Motley Fool as a senior editor for Fool.com, portfolio advisor for Millionacres, and launched new brands in the personal finance and real estate investing space.

His work has been featured on Fool.com, NPR, CNBC, USA Today, Yahoo Finance, MSN, AOL, Marketwatch, and many other publications. Today he writes for 24/7 Wall St and covers equities, REITs, and ETFs for readers. He is as an advisor to private companies, and co-hosts The AI Investor Podcast.

When not looking for investment opportunities, he can be found skiing, running, or playing soccer with his children. Learn more about me here.