Why Does Elon Musk Support Ending EV Tax Credits? Here Are Two Reasons | Global News Avenue

Elon Musk wears many hats. He is the CEO of the leading U.S. electric car maker and an influential adviser to President-elect Donald Trump, who may end federal support for electric vehicles.

Trump’s transition team reportedly preparing plans Eliminate $7,500 electric vehicle tax creditIt is a key initiative by President Biden to accelerate the adoption of electric vehicles in the United States and a major driving force for Tesla (Tesla). Musk reportedly told Trump he supported the plans.

Details of Trump’s electric vehicle plan and related tax credits have not yet been made public. Still, Musk’s support for Trump’s electric car plans raises questions about why he would support what appears to be headwinds for his company. Here are some possible explanations.

Tesla’s scale gives it advantage over rivals

Trump’s second term is expected to be difficult for the entire electric vehicle industry. In addition to eliminating the electric vehicle tax credit, Trump has vowed to roll back vehicle emissions standards that would force automakers to make electric vehicles a larger share of their total sales over the next decade.

However, some believe Tesla could potentially benefit from Trump’s anti-EV policies. Musk himself said on a call with investors in July that eliminating the federal tax credit would likely benefit Tesla in the long run, in part because “it would be devastating to our competitors.” “.

Tesla is one of the only U.S. automakers to be profitable on its electric vehicles, allowing it to withstand industry-wide headwinds. The company is able to produce electric vehicles at a lower cost than domestic rivals, allowing it to undercut domestic rivals without subsidies.

Still, Tesla’s sales could be hurt by the elimination of the electric vehicle tax credit. Gene Munster, co-founder of Deepwater Asset Management, compared the end of the electric vehicle tax credit to a 15% price increase on Tesla vehicles, which would lead to lower sales.

Ending tax credits could also disincentivize rivals such as General Motors (General Motors) and Ford (F) continues to invest heavily in electric vehicles, opening the door for Tesla to expand its already sizable market share.

Musk focuses on developing self-driving cars

Musk’s support for ending EV subsidies may also stem from his big bets on self-driving and robotaxis. “The value of Tesla is primarily autonomy,” he said in July of questions about electric vehicle tax credits. “These other things are an annoyance relative to autonomy,”

Trump team plans to make federal framework for self-driving cars a priority for incoming Transportation Department, Bloomberg reported on Monday. Framework to accelerate self-driving car adoption will benefit Tesla, the company Unveil prototype Two new self-driving cars were launched last month.

Musk expects Tesla’s Cybercab and Robovan (neither of which have pedals or steering wheels) to eventually form a fleet of robotaxis that compete directly with ride-sharing services like Uber.Uber) and Lyft (Laifu).

Since articulating this vision, Tesla’s stock price has soared as some investors reposition Tesla as a self-driving car and artificial intelligence company rather than a traditional automaker. Ahead of Trump’s re-election, the path to realizing Musk’s robotaxi dream is seen as facing more regulatory hurdles; companies like Alphabet (Google; Google) Waymo and General Motors’ Cruise face intense scrutiny from safety officials.

However, Musk’s influence over Trump could help clear the way for Tesla. “Tesla’s golden path around online taxis and self-driving is now within reach as the Trump/Musk strategic alliance unfolds in real time,” Wedbush analysts wrote.