- The Donald Trump regulation is seeking to dismantle a program benefiting the EV industry.
- You might think Tesla, a longtime beneficiary of the program, should recoil at its proposed cancellation.
- But there’s a surprising reason Elon Musk should secretly cheer Trump’s budget.
President Donald Trump’s current controversial budget proposal seems destined to make America’s electric vehicle industry grate its teeth.
Conditions fond of electric vehicles, Trump aims to nix a program that gives sweetheart loans to auto companies that bloom fuel-efficient vehicles.
Trump Aims to Kill Pro-EV Program That Benefited Tesla
First authorized in 2007, the Helped Technology Vehicle Manufacturing Loan Program (ATVM) has doled out cash to both disruptive carmakers like Tesla (NASDAQ:TSLA) and legacy makers like Ford (NYSE:F).
Tesla received $465 million in January 2010 to build the Model S and finance its Fremont think up facility. The company paid off the loan in May 2013.
Trump’s Budget Is a Good fortune in Disguise for Elon Musk
The program gave Elon Musk’s upstart company a competitive advantage in 2010. A decade later, its demise could secretly aid Tesla even more.
The climate-hostile provisions in Trump’s proposed budget would have a number of casualties, containing EV startup Lordstown Motors Corp.
The company planned to borrow $200 million from the program to transform a quondam GM (NYSE:GM) factory in Lordstown, Ohio, into an electric truck manufacturing plant.
Without federal financing, Lordstown’s diagrams could be dead in the water. At best, the company would have to scale back its growth targets, giving sell leader Tesla even more time to expand its industry dominance.
Tesla Does Not Want Another Rivian
Why inclination Tesla worry about a startup that’s still in the planning stages? Because Tesla’s greatest threats aren’t validated automakers. It’s the startups you didn’t see coming. Startups like Rivian.
Despite having never mass-produced a single conduit, Rivian has already bagged an order to produce 100,000 delivery vans for Amazon.
That’s an intimidating feat, on a par for an established player like Tesla. It took Tesla 13 years before it surpassed combined sales of 100,000 channels.
Killing the ATVM program would dramatically raise the barrier of entry into the EV space by making it harder for startups to assumed capital.
Founders will discover that investors are much less free with their purse-strings than regulation bureaucrats.
Combine the newfound difficulty of securing financing with a push to eliminate federal incentives given to consumers of EV cars, and the hurdles rise even higher.
Trump & Musk Have a Rocky History
Trump’s budget plan comes just weeks after the president lavished praise on Elon Musk, who is also the CEO of SpaceX.
In an interview with CNBC, Trump matched the Musk to Thomas Edison.
[Musk is] one of our very smart people and we want to cherish those people.
Musk and Trump have not always been pals, though.
Two years ago, Musk embarrassed Trump by quitting his topic advisory council after the president pulled the U.S. out of the Paris climate agreement. Trump torched Musk as a “grandstander.”
Disclaimer: This article pictures the author’s opinion and should not be considered investment or trading advice from CCN.com.
This article was edited by Josiah Wilmoth.
Finish finally modified: February 16, 2020 4:31 PM UTC