How Elon Musk's worst business decision led him to Trump

new York
CNN
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Elon Musk, the world's richest person, will take on an official role trying to help President-elect Donald Trump make government more efficient. For the increasingly distracted CEO and business leader, this will add another responsibility to an ever-growing to-do list.

Musk, CEO of Tesla and SpaceX, owner of X and CEO of other companies including Neuralink, xAI and The Boring Company, is already a busy guy. Even though the Trump job is just a part-time job (the announcement said it was some kind of consulting gig), it's another job for Musk that doesn't involve running the world's most valuable car company.

But here's the thing: Musk's recent distractions may ultimately matter little to his (many) businesses. And there are actually good arguments that they pay off for investors.

Tesla, Musk's most valuable company, has struggled to maintain its dominance in the electric vehicle market in recent years. Sales slowed as Tesla faced increasing competition at both the high and low ends of the market and Tesla was recently overtaken by Chinese rival BYD in electric vehicle sales. Meanwhile, Tesla has faced numerous federal investigations over its self-driving technology, and the company's long-promised autonomous “Cybercab” announcement last month contained a series of candid promises that sounded like a load of nonsense – and were even coming from the infamous Musk over-promises.

But for Tesla investors, all of that has faded into the background over the past week. Shares of Tesla (TSLA) have risen 31% since Election Day as investors believe Musk's influence over Trump's administration will usher in an era of deregulation – particularly in key industries and technologies that could benefit the company.

“The benefits of Musk’s involvement in Trump’s administration outweigh the negatives,” said Dan Ives, an analyst at Wedbush Securities. “Tesla investors want Musk to be more – not less – involved in the Trump White House because of his influence on AI advancement, China tariffs and accelerated regulation of autonomous driving systems.”

Musk, Tesla's largest individual shareholder, has personally reaped the rewards of the stock's rise. According to Bloomberg's Billionaires Index, he is $55 billion richer today than he was on Election Day.

Trump has expressed his disdain for electric vehicles, but that may ultimately not matter much to Tesla – in fact, eliminating tax credits could help Tesla by reducing competition, which relies more heavily on electric vehicles to drive sales demand. Additionally, several federal investigations into Tesla's self-driving technology could come to a halt, Ives said.

Meanwhile, SpaceX continues to maintain a lead (and entire astronauts) over the competition, and an era of deregulation under Trump could also help the company. SpaceX's valuation was reportedly over $200 billion earlier this year, and after a mishap at Boeing with the Starliner, SpaceX had to come in to rescue astronauts stranded at its stranded rival. And the company now uses “sticks” to catch rocket boosters from the air.

By contrast, X has clearly struggled under Musk – it has lost 80% of its value, according to Fidelity, as advertisers abandon the social network, which has become a hotbed for hate speech and conspiracy theories. But that's not because Musk was distracted – it's because he attended

But ironically, Musk's controversial – and expensive – $44 billion purchase of Twitter (now the president's ear. And that has given Tesla a valuation of over $1 trillion. It is one of only nine companies to go public with a 13-digit rating.

Ives called Musk's path a “Twilight Zone puzzle.”

“It’s a ride that feels like it’s just beginning,” Ives noted.

The prerequisite, of course, is that Trump and Musk continue to get along well with each other. Trump has a long list of former allies who have fallen from grace for one reason or another. And no matter how much power and influence Musk might give up, Trump will have the ultimate trump card: he will become president.