What Musk stands to gain and lose with Trump – USA TODAY
SpaceX launched a Falcon 9 rocket for the first time since a fireball engulfed a similar rocket on a Florida launch pad more than four months ago. (Jan. 14)
SAN FRANCISCO â Elon Musk saysÂ he disagrees with last week’s executive order on immigration from predominantly Muslim nations.
But he’s explained his seat at the new administration’s advisory table by saying that it’s better to talk to President Trump than attack him.
Now it remains to be seen what that talking willÂ accomplish for the tech entrepreneur.
As the head of SpaceX and Tesla, which now includes SolarCity, MuskÂ has plenty to gain from having the new Trump Administration look favorably on his ambitions, from shifting the U.S. from an economy that relies largely on fossil fuels, to Musk’s goal ofÂ sending humans to Mars.
The rub: The Trump Administration might find those goals paleÂ in contrast to other promises Trump Nation expects, like more coal and oil industry jobs and fewer government regulations.
Here’s what’s at stake:Â
Electric cars for everyone
Musk has a hit on his hands with his current Tesla models, the S and the X sedans. But at around $100,000 nicely equipped, theyâre hardly the peopleâs car. Enter the lower-cost Model 3 later this year, which could kickstart an electric car revolution.
Or so Musk would hope. The reality is that as much as he can tout the Made in America nature of his vehicles, U.S. drivers have yet to be convinced they need battery-powered vehicles, especially with gas prices stabilized and a new pro-oil administration at the helm. And the Big Three automakers have never had huge success with their electric offerings.
For Musk, lobbying the president on behalf of his auto company would seem to be critical.
Trump has indicated that heâll take another look at the Environmental Protection Agencyâs 2025 fuel-economy goals of 36 miles per gallon, which the big automakers have decried as too stringent. Also potentially at stake are federal tax incentives Â for buyers of electric cars.
âIf those are repealed, and the real-world cost of a Model 3 jumps $7,500 or more, putting it back at a base price of more than $40,000, that will drive many folks away who were otherwise ready to give Tesla a try,â says Karl Brauer, executive publisher of Kelley Blue Book.
That might effectively kill Muskâs plan to massively increase vehicle production at his Fremont, Calif., factory from 80,000 to 500,000 units a year, a boost that is considered critical to the company achieving profitability.
“Tesla’s success will be dependent on vehicle adoption,” says Oppenheimer analyst Colin Rusch, who recently cut his earnings estimates for the company’s upcoming fourth-quarter results due to lower than expected delivery numbers. “In sum, it’s highly dependent on consumer interest in the product.”
Any seriousÂ cutback in auto-production scale also could have a trickle-down effect on Muskâs expansion plans at his Nevada Gigafactory, where batteries will be made for vehicles as well as his Powerwall and Powerback storage devices.
âIf Elon said to Trump, âI donât need you, I can do it on my own,â a lot of his government-backed incentives just might vanish,â says Kelley Blue Book’s Brauer.
Space and beyond
Musk has been blunt about wanting to send humans to Mars, joking that heâd even like to die there, âjust not on impact.â
But getting there is going to require a lot of capital. SpaceX is still a small player when it comes to securing lucrative government contracts from NASA and the Department of Defense, the majority of which still get handed to longtime commercial partners such as ULA, says former NASA administrator Lori Garver.
âThe government has a budget of around $19 billion, and only a billion of that goes to commercial space companies (such as SpaceX and Amazon founder Jeff Bezosâ burgeoning Blue Origin),â says Garver, who was deputy administrator of NASA from 2009 to 2013 and now is general manager of the Air Line Pilots Association.
âElon is lobbying Trump to change that dynamic,â she says.
In Muskâs favor are SpaceX’sÂ roughly $60 million-per-launch prices that undercut other contractors by about two-thirds. Such savings could appeal to Trumpâs cost-cutting nature.
Another possible benefit of Musk having ties to the administration would be ground-floor access at the start of any new lunar mission, something that has been advocated strongly by Trump campaign advisor Newt Gingrigh.
And for Musk,Â getting a bigger piece of that multi-billion-dollar government space pie could generate the profits necessary to build out a Mars launch.
But working against Musk is the difficulty any president has in bucking a Congress that is lobbied heavily by Lockheed and Boeing. âPresidential leadership in space has historically been important only when the president wanted to make it so,â says Garver.
And thereâs indication Trump would not make it so. On the campaign trail in New Hampshire, Trump rebuffed a young boyâs wide-eyed questions about space by telling him the country had bigger problems to solve.
âWeâve got to fix our potholes,â he said. âYou know, we donât exactly have a lot of money.â
Solar in a time of big oil
On the surface, this wouldn’t appear to be an opportune moment to trumpet the benefits of solar energy, one of Musk’s over-riding beliefs. Trump has said he will revisit the debate over the Keystone XL oil pipeline, and recently appointed a former ExxonMobil CEO, Rex Tillerson, to be Secretary of State.
But on the other hand, having a secure and reliable source of energy that doesn’t depend on other countries might appeal to the new administration. And Musk could play a key role in giving the nation’s aging grid a solar makeover, says Brauer.
“If the government made Elon the change agent for solar panel home power and upped the subsidies on that, and tied a lower-cost electric car to that, he could be at the center of a paradigm shift,” he says.
Musk has also been vocal about the benefits of imposing a carbon tax on companies emitting CO2 into the atmosphere, which scientists say is a major factor in rising global temperatures. A tax might seem like a non-starter in the current climate, given that it could trickle down to consumers in the form of higher energy costs.
But if presented by Musk as a net positive, a carbon tax could work in both his and the government’s favor, says Roger Pielke, climate and policy expert with the University of Colorado.
“Americans are now paying less than anytime in history for their energy, so you could argue that if your bill were to go up a few pennies a month now would be the time to impose a carbon tax on energy providers,” says Pielke.
Rex Tillerson, recently confirmed as Trump’s choice for Secretary of State, had endorsed the idea of a carbon tax when he was running ExxonMobil. That stance led Musk to support Tillerson’s appointment in a tweet, a solar fan praising a former oil man.
Coming up with a big win for U.S. consumers in the form of inexpensive solarÂ energy could also appeal to Trump, says analyst Brauer.
“Trump would love to have you think he’s anti-environment and pro-oil, but if with Elon’s help he could give everyone home solar and a cool electric car, there’s no downside,” he says. “And Trump loves those things that you just can’t argue against, like bringing more jobs to America.”
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