Elon Musk has become one of the most high-profile supporters of former President Donald Trump, throwing his weight behind the former president’s political ambitions and making a substantial financial investment in Trump’s campaign.

Musk’s involvement in Trump’s victory in the recent election has raised eyebrows, as it could impact not only his wealth but also the future of his companies, particularly Tesla.

Musk’s commitment to Trump has been more than just vocal support. The Tesla CEO has contributed nearly $119 million to a political action committee designed to boost Trump’s candidacy. His investment was part of a broader effort to provide critical funding when the campaign’s budget began to fall short. 

Musk has even appeared at rallies with Trump and hosted a public interview with him on his own social media platform, X. As one tech analyst put it, Musk has "bet big" on Trump’s success.

On election night, Musk’s gamble seemed to pay off, at least in the short term. Following Trump’s win, investors responded positively, sending Tesla’s stock up by nearly 15%. This surge boosted Musk’s personal holdings in the company, which is significant considering his 411 million shares. 

The increase in Tesla’s stock value added more than $15 billion to his net worth, resulting in a massive return on his $119 million investment. It marked a two-year high for Tesla, a company that had faced challenges in recent months.

The Risks: Potential Impact on Tesla and EV Policies

While Musk’s support of Trump has proven profitable in the short term, it comes with risks. Much of Musk's wealth is tied to government support through subsidies, loans, and other incentives provided to his companies, including Tesla and SpaceX. 

A second Trump presidency could alter this landscape, especially when it comes to government backing for electric vehicles (EVs).

Trump has been openly hostile to electric cars, calling them expensive and problematic for the auto industry. His administration could scale back or eliminate federal subsidies for EVs, including the $7,500 tax credit for electric car buyers.

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Musk, however, has downplayed the impact of losing these incentives, claiming that the absence of subsidies could actually benefit Tesla by reducing competition from legacy automakers.

Potential Opportunities: Self-Driving Cars and Regulatory Approval

There is a potential silver lining for Musk’s Tesla in a second Trump presidency: the future of self-driving technology. Trump’s policies could expedite regulatory approval for Tesla’s autonomous vehicles. 

This could provide a significant boost to Musk’s long-term vision for Tesla, including his plans for a fleet of driverless “robotaxis.”

Industry analysts have suggested that under Trump, the regulatory environment for self-driving technology could become more favorable, allowing Tesla to move forward with its ambitious plans. This could be a major win for Musk and Tesla, especially as other carmakers play catch-up in the autonomous vehicle race.

One of the biggest risks for Tesla under a Trump administration could be a renewed trade war with China, a key market for the company. Tesla’s Shanghai factory is a vital part of its global supply chain, and any deterioration in U.S.-China relations could hurt Tesla’s operations. 

With Trump’s more aggressive stance toward China, Tesla could find itself caught in the crossfire, which could impact its profitability.

While Tesla might face uncertainty under Trump, Musk’s other ventures, such as SpaceX and X (formerly Twitter), may be less affected by the political climate. SpaceX, a leading player in the aerospace industry, is likely to continue receiving government contracts, regardless of the administration in power. 

Similarly, Musk’s controversial ownership of X has not been significantly impacted by government actions under Biden, and it’s unlikely to change under Trump.

Musk’s deep financial involvement in Trump’s campaign has certainly paid off in terms of his holdings in Tesla, but it’s not without its risks. The potential rollback of EV subsidies and the possibility of renewed tensions with China could create challenges for Tesla in the future. 

At the same time, the regulatory environment for self-driving vehicles could become more favorable, opening new opportunities for Musk’s companies.