No business leader has done more to support the former President Donald Trump‘s candidacy Elon Musk. But the billionaire and his business empire have faced both positives and negatives after Trump won back the presidency in Tuesday’s election.

Musk has donated nearly $119 million so far to the political action committee he founded to support Trump, according to Federal Election Commission filings. She appeared at rallies with Trump and held a fawning interview with him on the social media platform X.

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

Earlier Wednesday, investors were betting that Trump’s win would also be a win for Tesla (TSLA), Musk’s largest publicly traded holding, with shares of the electric vehicle maker rising 12% in premarket trading. This increased the value of Musk’s directly owned Tesla shares by more than $12 billion; That gives Trump a better than 10,000% return on the $119 million he donated. 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 like Tesla and SpaceX have received over the years. Much of this money would continue to flow even if Vice President Kamala Harris won. But even if some government support for electric vehicles is now cut or cut (most likely with Trump’s victory), Musk’s fortune will remain intact. In fact, Tesla could benefit if government support for electric vehicles ends.

What does Trump’s win mean for Tesla?

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

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

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 appears to be the biggest blow to Tesla from another Trump presidency—a reduction, if not an end, of federal support for electric vehicles—may not be so bad for Tesla and Musk.

But other policies at the center of Trump’s plans could cause big problems.

Trump has vowed to end what he calls “Biden’s EV mandate” even though no such mandate exists, and it’s unclear what he’s talking about.

But under Biden, billions of dollars in loans for the construction and purchase of electric vehicles to encourage automakers to invest in factories to produce electric vehicles and batteries in the United States, including support for charging stations and a $7,500 tax credit for many electric vehicles Significant government support was provided. 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, which could greatly limit the tax credit’s availability. Or if Trump has a Republican-controlled Congress, he could pass legislation that would eliminate the credit altogether.

But Musk said he wasn’t worried about the tax credit expiring because Tesla sees it as a boon for legacy automakers’ efforts to enter the EV market and provide more competition.

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

Thanks to increased competition, Tesla’s global sales fell 2% in the first nine months of this year compared to last year. Sales and profits managed to improve in the third quarter, but they fell this much for the first time in the company’s history.

Driverless car policy may change

Ives said Trump could green light Musk’s hope for true driverless vehicles, as well as a fleet of “robotaxis” that provide rides without any driver.

So far, the company’s existing driver assistance features, known as Autopilot and Fully Self-Driving, or FSD, are facing investigations from federal safety regulators following a series of crashes involving the technology. These studies could slow down allowing truly autonomous Tesla cars to hit the roads, despite Musk’s widely discussed claim that Teslas using FSD are already safer than those driven by humans.

“Under the Trump administration, these investigations may slowly fade away,” Ives said.

It’s unlikely that all government support for electric vehicles will disappear in Trump’s next administration. Beyond buyers’ tax credits, most of the taxpayer dollars spent to support electric vehicle adoption come in the form of government loans to automakers and their suppliers to build factories in southern “red” states. It’s unlikely Trump will want to cut off that support and the promise of jobs in those states, even if they eventually create competition for Musk and Tesla.

Traditional automakers say they will continue their plans to produce and sell more electric vehicles in the future. They say electric vehicles are the future of the industry, even though the adoption rate has slowed recently.

“This is not a strategy where we’re going to block the presidential election or the next election and the next election and see what we can get out of the EPA,” Ford CEO Jim Farley told investors in July. “We believe the only way to remain resilient is to make money from small electric vehicles. 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 gets the EPA to change emissions rules here, automakers will still have an incentive to continue bringing electric vehicles into compliance with regulations elsewhere or stricter environmental rules in many U.S. states, including California, which has its own stricter emissions rules followed by many other states. .

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

“We could see much slower adoption of EVs (with a regulatory change),” said Jeff Schuster, global head of automotive at industry consultancy GlobalData. “But even with all the investment, we are unlikely to see this reversed.”

Trump’s China policy could hurt Tesla

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

With Trump’s victory, “he’s going to be much tougher on China, and then the negatives may outweigh the positives for Tesla,” Ives said. “More than 40 percent of deliveries come from the Chinese market. Tesla gets caught in the crossfire.”

It could also be a problem for Tesla when Trump taps Musk to lead his administration’s efforts to reduce what they call government waste, as the two noted on the campaign trail.

Regardless of the outcome of those efforts, and regardless of whether Musk has a formal or informal government role in Trump’s new administration, the last thing Tesla investors want to see is Musk becoming even more distracted running Tesla, Ives said.

“You have more time away from Tesla at a time when you want more attention on Tesla,” Ives said.

Less impact on SpaceX and X

Musk’s other major business, SpaceX, likely wouldn’t have significantly different relationships with the federal government no matter who is elected. Its biggest rival, Boeing, is experiencing serious problems with the spacecraft that NASA agreed to carry astronauts to the International Space Station.

And Musk’s ownership of X has been widely criticized, especially by Democrats, for spreading misinformation. But it hasn’t been shut down or blocked by government action even under Biden, and the new Trump administration likely won’t take any action against it either. And considering the financial losses since he acquired the company, that’s now a relatively small portion of Musk’s overall net worth.

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