Donald Trump winning the presidential election could be bad news for billionaire Elon Musk’s electric green energy company since it’s unclear what will happen to soon-to-expire subsidies, according to The Wall Street Journal.
Trump’s election, coupled with Republican control of both chambers of Congress, might mean the end of some federal tax subsidies for solar power and electric cars, WSJ suspects in the article.
Currently, green subsidies are set to phase out over time, and Trump could damage Musk’s business ventures if he eliminates or refuses to renew lucrative tax credits.
Musk’s solar business, SolarCity, is based around leasing panels to people in exchange for tax credits. Customers of Tesla Motors, Musk’s electric car company, can get a $7,500 federal tax credit for buying a Tesla.
Under law, electric-vehicle tax credits will be slashed in half once a company, like Tesla, sells 200,000 electric cars in the U.S.
“I feel a bit stronger that he is probably not the right guy,” Elon Musk said in an interview describing Trump. “He doesn’t seem to have the sort of character that reflects well on the United States.”
Despite his skepticism of Trump and worries from analysts, Musk claims that Trump’s presidency is “not going to make too much of a difference honestly” to his business.
Tesla lost $889 million in 2015 and $294 million the previous year, just as SolarCity lost $769 million in 2015 and $375 million the year before. Declining subsidies and the resulting falling demand could mean that both companies start bleeding money even faster. Musk’s response to these business failures was to merge both SolarCity and Tesla.
Musk was already in trouble due to a conflict with liberal billionaire Warren Buffett, the third richest man in the world with an estimated net worth of $60.8 billion. Musk and Buffett have been locked in an escalating conflict over solar subsidies since last December.
In August, Nevada’s Supreme Court struck down a ballot measure to change the state’s constitution to give lucrative subsidies to SolarCity and ruled the amendment “inaccurate,” ”misleading” and “argumentative.”
If the ballot initiative had been successful, Musk would effectively reverse Buffett’s major December victory, when Nevada’s Public Utilities Commission (PUC) imposed rules that effectively ended net-metering. Net metering had been forcing electrical utilities, owned by Buffet, to buy the energy produced by rooftop solar panels, owned by Musk, at high rates.
Nevada’s regulatory change caused Musk’s SolarCity stock to be devalued by roughly $165 million in a single day.The PUC’s decision to curtail net-metering payments to SolarCity’s customers infuriated the company, causing it to make good on its threat to end 550 jobs in the state.
Many states other than Nevada have enacted net-metering policies for homeowners with solar panels. These policies drove up demand for solar panels by allowing consumers to sell money back to the power grid, which effectivly transfered wealth from Buffett’s utilities to Musk’s rooftop solar company.
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