Elon Musk donated over $ 250 million for Donald Trump's choice. Instead, he was chosen with an invoice that could cost Tesla billion, writes Financial Times.
Trump's “big and beautiful” draft endangers a crucial source of profit for Tesla by neutralizing the rules that allow the electric vehicle manufacturer to sell billions of dollars through emission certificates.
The draft law deepens the crisis of the company, which is already facing the decrease of sales and the loss of tax incentives for electric vehicles. The new legislation caused a angry reaction from Musk.
Trump replied that “without subsidies, Elon should probably close the store and return home to South Africa.”
The escalation of their dispute threatens critical parts of Musk's business empire-and leaves the Republican legislators trapped between the US president and the richest man in the world.
“All family quarrels eventually start from money,” said Trevor Traina technological entrepreneur, established in San Francisco, who was an ambassador in Austria during Trump's first term.
“This seems not to be different … billions of subsidies compared to hundreds of millions in primary elections.”
In public, Musk argued against the draft law on the grounds that it will greatly increase the US deficit. But the threat to Tesla is also essential for his positions.
“His draft law, big and beautiful”, also concerns the federal standards regarding “the average fuel consumption of companies” (Cafe). The program penalizes car manufacturers whose vehicles do not meet the fuel consumption efficiency objectives and reward those who do not produce emissions that can then be sold to gasoline focused competitors to compensate for fines.
The sale of loans contributes to a substantial and increasing proportion to the Tesla profit.
In the first quarter, Tesla systems dependence was obvious: it would have registered losses if there were no emission certificates, which increased by 35%, reaching $ 595 million, exceeding the total net income of $ 409 million.
Last year, the company reported revenues of $ 2.8 billion from the sale of such loans worldwide, increasing compared to $ 1.8 billion in 2023, representing 39% of its $ 7.1 billion net income. He has done over $ 11 billion in 2015.
The draft budget law cancels the Cafe project by establishing fines to zero. Tesla is worried that traditional car manufacturers will largely cease to buy credits as a result, people have said familiar with the company's internal debates.
“If there is no penalty for deception, there is no reason to buy compliance credits,” said Dan Becker, director of the Safe Climate Transport from the Biological Diversity Center. “I'm not sure how expensive these will be [schimbări] compared to the damages that Musk caused to Tesla ”
Tesla does not divide its profits from regulatory loans by regions or between three American programs. But a person familiar with the situation said that, on average, up to three quarters come from the US, the rest of similar systems in the European Union and Asia.
The effect on Tesla profit will not be immediately, because the company often negotiates multiannual contracts with rivals, whose completion will take some time. However, some of these agreements have included force majeure clauses and provisions on legislative changes that could lead to their cancellation after Trump's bill, one of the persons said.
Tesla will continue to earn money from selling loans abroad. Recently, he signed an agreement to “combine” the EU emissions with Stellantis, Ford, Mazda, Subaru and Toyota. UBS analysts said this agreement could eventually value over 1 billion euros if Tesla monetized its entire long position.
In the US, there are few hopes to reactivate federal American emission credits as long as Trump is in office. But California has sued the administration for its efforts to close the scheme, in which Tesla has the largest loan balance.
“There will be a certain level of credit trading [dar] The market has reached a minimum long-term level, “said one of Tesla employees.” Trump did so quickly and so ferocity that the whole program could simply disappear. “
Tesla did not respond to comment requests.
The car manufacturer has more to lose from Trump's agenda. In addition to selling cars and credits, it also produces its own batteries, it operates a network of approximately 2,600 charging stations in the US and builds solar panels.
Almost all these businesses will lose significant federal support or tax exemptions; Only subsidies for energy storage remain in force. Particularly harmful will be the elimination of a $ 7,500 federal fiscal loan for certain purchases and leases of electric vehicles at the end of September.
In response to Musk's attacks, Trump suggested that the so-called government efficiency department (Doge), which Musk himself founded, should cancel the federal contracts of Spacex and Tesla.
Tesla also warned that Trump's unpredictable tariff policy and China's commercial war will disrupt his supply chain, reduce his access to vital materials and turn it into a booklet because of Musk's connection with the administration.
“This is a terrible policy and a devastating blow for the Tesla profit,” said a former executive director Tesla. “Elon finally realized this, but this is a day late and more money lost,” they added.
The power of the billionaire to respond to defend his empire seems to be limited, even with his huge funds for future political donations.
Musk left the controversial role from Doge – which drastically reduced the federal bureaucracy – in May. The tensions between Musk and the White House regarding the customs tariffs and the tax law climbed in June, when it seriously criticized the president's internal emblematic legislation.
The relationship between Trump and Musk has been marked by dramatic changes. Last week, Eric Trump, one of the president's sons, told the Financial Times that he was “in love” by Musk, calling him “one of the great geniuses of our time.”
But Musk intensified his opposition this week, while the tax laws passed the final vote with extremely small margins in Congress.
The billionaire said that anyone who voted for “the greatest growth of debt in history should leave their heads of shame” and “will lose the primary elections next year.”
Thomas Massie, a rare Republican member of the Chamber of Representatives who opposed the draft law, thanked Musk for “financial aid to continue my independent voice mission”-after Trump promised that he would remove the massie.
But few Republicans joined with Musk. Fifty of the 53 Republican senators voted for the legislation, the vice -president of JD Vance being decisive.
Many of Musk's allies in the business community have also supported the draft law, which would expand income tax exemptions. James Fishback, an investor and former dog advisor, created a super Pac to counteract Musk's political donations. money from individuals or organizations for the purpose of campaign advertising;
“The prevention of tax increases is absolutely essential,” said the technology investor Keith Rabois, who donated over $ 2 million with his husband, Jacob Helberg, to support Trump's campaign in 2024. Helberg was nominated by Trump for a management position in the State Department.
The draft law has passed the final vote of the Congress on Thursday and will reach the desk of a triumphant president.
Traine, the former ambassador named by Trump, said: “I have endless respect for Elon, but I think Trump has the greatest responsibility here.”
