The Teslarati are worried.
After a decade of the company and its CEO, Elon Musk, riding a wave of enthusiasm about electric vehicles and the remaking of transportation, the election of Donald Trump as President and complete Republican takeover of Congress, the worry is that EV-friendly policies are on the way out and that Tesla will lose federal support for its business.
That business will now include solar products and services, after Tesla shareholders voted last week to merge with SolarCity.
Solar in the US has also been heavily reliant on federal backing during the Obama administration.
Tesla and Musk have their detractors, many of who accuse the CEO of living off the government’s dime – something that Musk himself wouldn’t deny, throwing in his third company, SpaceX, for good measure (SpaceX’s biggest customer is NASA). Electric vehicles, he would argue, make up only about 1% of global auto sales. So Tesla, as well as any other electric carmaker, including the big car companies, need all the help from governments they can get.
Tesla shares are already down over 20% year to date, so the “Trump phenomenon” and whatever impact it has on green businesses is an unwelcome shock to Tesla’s system. At best, it makes investors nervous. At worst, it sends them scurrying for the exists.
The crux of the problem
But here’s the problem: As much as some Republicans might not like environmentalism or the leadership on climate-change action that Musk has provided, Tesla, SolarCity and SpaceX are three of the best examples of what Republicans and Trump are always talking about unleashing to restore the US economy to what they insist is vanished glory.
In just over ten years, Tesla has created a $30-billion market-cap company. SolarCity’s pre-merger market cap is $2 billion. SpaceX has been valued at something like $12 billion, pre-IPO.
That’s roughly $45-billion worth of business, with nearly all of it maintaining operations and employing people in the US. How many people? Tesla has 14,000 workers, SpaceX has 5,000, and SolarCity has 13,000. These are not all high-income, high-tech, education-intensive jobs, either, as might be the case with a Silicon Valley software startup. Tesla operates a car factory (which in turns supports parts suppliers), while SolarCity needs panel-installers and service personnel. Musk’s companies are spreading the wealth around the income distribution.
A model of risk-taking
Collectively, this is a story of risk-taking entrepreneurship that’s paid off. Tesla, SolarCity, and SpaceX weren’t exactly small businesses when they started out, but they were businesses that were pitting themselves against strong odds.
Tesla is the first successful new car company to be created in the US in decades, and SpaceX is the first viable private space-exploration business to not just largely achieve its objectives, but to chart ambitious new ones, including a mission to Mars.
In fact, it would be difficult to find companies that pro-business Republicans could praise more effusively than these three, simply on the fundamentals of what creating and growing companies in America is all about. Democrats and Independents can do the same.
Discomfort with Musk’s larger vision of accelerating humanity’s exit from the fossil-fuel era might color views of his companies from the right, but if a businessman wants to create tens of billions of value, essentially out of nothing, and save the planet at the same time, then why take a position against it?
At a level, business is business, and although it’s unclear whether SpaceX will ever make it to Mars or whether SolarCity will put a solar roof on every house in the US, there’s no denying that almost 400,000 people want to own a Tesla Model 3, based on the number of $1,000-a-pop in preorders the automaker has racked up.
The future is still being written
Let’s be clear: we have no idea what type of stance a Trump administration or GOP-controlled Congress would take toward Musk’s enterprises. The worry is being driven by the assumption that a big theme in government is set to change: that support for companies that are working toward sustainability will be withdrawn.
It’s important to note, however, that withdrawing that support, in the face of wildly successful businesses, wouldn’t make much sense. There are also arguments that it would leave opportunities on the table – opportunities that global competitors would be happy to snap up, which in turn would undermine job growth in the US.
But the nuts and bolts matter less in this case than the legitimate concern that ideology will triumph over reality. Politicians who turn against Tesla – or SolarCity or SpaceX – would be discouraging something that’s become a core American value: those who take the mightiest risks will gather the greatest rewards.
Musk and his companies have proven themselves, surviving brushes with bankruptcy and rockets exploding on launch pads to become powerful examples of why daring entrepreneurship and aiming very, very high to solve the biggest problems truly make America great. Now Washington needs to live up that example.