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Tesla CEO Elon Musk leans Republican, and he’s no friend of Joe Biden. But President Biden and his fellow Democrats have done Musk and his company a favor no Republican would likely consider.
Biden’s new rules for tailpipe emissions, which the Environmental Protection Agency proposed on April 12, would sharply limit the pollution cars are allowed to emit for model years 2027 through 2032. If ultimately adopted, in whole or in part, the new rules would effectively force automakers to build far more electric vehicles and far fewer gasoline-powered ones.
That could cause upheaval at many automakers trying to shift from gas-powered cars to electrics at a measured pace that doesn’t wreck their profitability. For Tesla, (TSLA)
Ironies abound. Musk and Biden have feuded over labor unions, which Biden considers a key constituency and Musk loathes. When highlighting the rollout of EVs, Biden typically touts new efforts at Ford (F) and General Motors, (GM) which are unionized, while ignoring Tesla, which is not. Yet Tesla is the undisputed leader in EV sales in the United States, with 65% of the US EV market and vastly more sales in the category than Ford, GM
Musk got so irritated by Biden’s dismissiveness that in January 2022 he called Biden a “damp sock puppet” on Twitter. Later that year, Musk said he had a “super bad feeling” about the economy, and at a Biden press conference a reporter asked Biden for his response. “Lots of luck on his trip to the moon,” Biden quipped, referring to Musk’s hopes for space travel on one of his Space X rockets. Musk continued to tweak Biden on Twitter, and right before the midterm elections last year, Musk advised his 134 million Twitter followers to vote Republican.
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Democrats, however, are better for his car company. Musk and Tesla deserve credit for foreseeing the electrified future and persevering through near-death experiences. But they’ve had some help. The electric-vehicle tax credit that helps subsidize the cost of an EV originated in a 2009 law passed by Democrats and signed by President Obama. That tax break helped goose Tesla’s sales during difficult years when it lost money and needed every penny. President Trump wanted to kill that tax credit, but wasn’t able to.
Tesla has also benefited from regulatory credits in California, largely governed by Democrats. California gives Tesla credits for producing zero-emissions vehicles that it can sell to other companies who use them as a pollution offset. Such sales have netted Tesla hundreds of millions of dollars.