No business leader has done more to support the former President Donald Trumphis candidacy than Elon Musk. But the billionaire and his business empire face both positives and negatives after Trump regained the presidency in Tuesday’s election.

Musk has so far donated nearly $119 million to a political action committee he set up to support Trump, according to Federal Election Commission filings. He appeared with Trump at rallies and hosted a cheeky interview with him on X, his social media platform.

“He’s betting big here. He’s thrown himself into the deep end of the pool in this election,” said Daniel Ives, technology analyst at Wedbush Securities.

Early Wednesday, investors were already betting that Trump’s win would also be a win for Musk’s main public holding company Tesla ( TSLA ), sending shares of his electric vehicle maker up 12 percent in premarket trading. That raised the value of Musk’s Tesla stock by more than $12 billion, making it a better than 10,000 percent return on the $119 million he donated to Trump. But there are risks for Tesla, even from Trump’s victory.

Much of Musk’s massive net worth can be traced to the government support his companies, such as Tesla and SpaceX, have received over the years. Even if Vice President Kamala Harris had won, much of that money would have continued to flow. But even if some government support for electric vehicles is now reduced or cut off, as is likely with Trump’s victory, Musk’s wealth will remain firmly intact. In fact, Tesla could benefit if government support for electric vehicles ends.

What a Trump victory means for Tesla

Musk posted numerous tweets on his social media platform X late Tuesday and early Wednesday celebrating Trump’s victory.

“The American people gave @realDonaldTrump a crystal clear mandate for change tonight,” he wrote in one.

Trump has been openly hostile to electric vehicles, saying they are too expensive, have limited range and will destroy jobs and the American auto industry. But what might seem like the biggest blow to Tesla from another Trump presidency — a reduction in, if not the end of, federal support for electric vehicles — might not be all that bad for Tesla and Musk.

But other policies at the heart of Trump’s plans could cause major problems.

Trump has promised to end what he calls “Biden’s EV mandate,” even though there is no such mandate and it’s unclear what he’s referring to.

But under Biden there has been significant government support for building and buying electric vehicles, including billions of dollars in loans to encourage automakers to invest in factories to build electric vehicles and batteries in the United States, support for charging stations and a $7,500 tax credit for many electricians. car buyers.

Many industry experts believe Trump will end these programs. Trump could order the Treasury Department to change the rules that determine when car buyers qualify for the credit, greatly limiting the availability of the tax credit. Or, if Trump has a Republican-controlled Congress, he could get legislation through to eliminate the credit altogether.

But Musk said he’s not worried about the end of the tax credit because Tesla sees it as a boon to legacy automakers’ efforts to move into the electric vehicle market and provide more competition.

“Take away the subsidies. It will only help Tesla,” Musk posted on X in July.

Due to increased competition, Tesla’s global sales fell 2% in the first nine months of this year compared to last year. Sales and profit managed to improve in the third quarter, but it was the first time the company saw such a decline in its history.

The self-driving vehicle policy may change

Trump is more likely to green-light Musk’s hope for true self-driving vehicles, Ives said, along with a fleet of so-called “robotaxis” that would provide rides without any kind of driver on board.

Until now, the company’s existing driver-assistance features, known as Autopilot and Full Self-Driving, or FSD, have faced probes from federal safety regulators after a series of accidents involving the technology. Those investigations could slow the approval of fully autonomous Teslas on the road, despite Musk’s widely contested claim that Teslas using FSD are already safer than those driven by humans.

“Under Trump, those investigations could slowly disappear,” Ives said.

Not all government support for electric vehicles is likely to disappear under the next Trump administration. Beyond the buyer’s tax credit, much of the taxpayer dollars spent to support electric vehicle adoption comes in the form of government loans to automakers and their suppliers to build factories in the “red” states of the South. It’s not likely that Trump would want to cut back on that support and the promise of jobs in those states, even if they will eventually provide competition for Musk and Tesla.

Traditional automakers say they will move forward with their plans to build and sell more electric vehicles in the future. They say electric vehicles are the future for the industry, even though the adoption rate has slowed recently.

“It’s not a strategy where we handicap the presidential election or the next and the next and see what we can get away with with the EPA,” Ford CEO Jim Farley told investors in July. “The only way we think we’re resilient is to make money on small electric vehicles. And that’s our bet.”

Automakers are pushing to sell more electric vehicles so companies can meet increasingly tough environmental regulations in the United States, Europe and Asia. Even if Trump convinces the EPA to change emissions rules here, automakers will maintain an incentive to keep making electric vehicles to meet regulations elsewhere, or tougher environmental rules in many US states, including California, which has its own stricter emissions rules, followed by many other states. .

Industry experts say they don’t expect electric vehicle sales growth to stop even if Trump changes emissions rules, in part because of growing consumer demand.

“We may see a much slower adoption of electric vehicles (with a change in regulations),” said Jeff Schuster, global head of automotive at GlobalData, an industry consultancy. “But with all the investment, we’re not likely to see it reversed.”

Trump’s China policy could hurt Tesla

The bigger problem for Tesla with Trump’s victory is that there could be a renewed trade war with China, Ives said, given the importance of its Shanghai factory to its global sales and profits.

With Trump’s victory, “it’s going to be a lot tougher on China, and then the negatives could outweigh the positives for Tesla,” Ives said. “More than 40% of deliveries come from the Chinese market. Tesla would be caught in the crossfire.”

And it could also be a problem for Tesla if Trump taps Musk to lead his administration’s efforts to cut what they call government waste, as the two mentioned on the campaign trail.

Whatever the outcome of these efforts, and whether or not Musk has a formal or informal government role in the new Trump administration, the last thing Tesla investors want to see is Musk even more distracted from his time drove Tesla, Ives said.

“It’s more time away from Tesla at a time when you want more attention for Tesla,” Ives said.

Less impact on SpaceX and X

Musk’s other major venture, SpaceX, probably wouldn’t have had a significantly different relationship with the federal government regardless of who was elected. Its main competitor, Boeing, is having serious problems with the spacecraft that NASA has contracted to transport astronauts to and from the International Space Station.

And Musk’s ownership of X has been widely criticized, particularly by Democrats, for spreading misinformation. But it hasn’t been shut down or prevented by government action even under Biden, and the new Trump administration probably won’t take any action against it either. And given the financial losses since acquiring the company, it’s now a relatively small part of Musk’s total net worth.

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