Elon Musk's bet on the presidential election comes with high stakes

• Elon Musk has fully committed to supporting former President Donald Trump in his re-election bid.
• Musk could gain influence at the federal level if Trump is elected president.
• It's unclear what a Harris administration would mean for Musk and his business empire.

There is a lot at stake for Elon Musk and his business empire this election season.

Since the announcement his support of former President Donald Trump in JulyThe billionaire has consistently used X to express his support for the Republican Party and has taken the stage with Trump at at least two rallies.

He has hosted his own series of political “conversations” and has invested more than $130 million in pro-Trump efforts this year. He is also committed to a daily drawing of $1 million to registered swing state voters who sign his petition in support of free speech and the right to bear arms.

Musk's actions raise the question: What can the billionaire gain from a Trump presidency?

Possibly a lot.

Musk under Trump

Many of Musk's companies are largely dependent on it on federal permits, regulations, subsidies or contracts – and Trump has promised a looser regulatory environment plans to reduce corporate and personal taxes.

If Trump secures the presidency, Francesco Trebbi, a professor of economics and public policy at the University of California Berkeley, told Business Insider that Musk could benefit from “appointing key personnel within the public administration.” This could give him valuable contacts that extend beyond the next four years, he said.

Trump has already incorporated some of Musk's policy proposals into his campaign and plans to set up a government efficiency commission led by Musk. Trump said the commission would conduct a “full financial and performance audit of the entire federal government” and make proposals for “drastic reforms.”

Musk suggested firing several federal employees at a town hall in Pennsylvania on October 18.

“Why the hell do you need 428 agencies,” Musk said at a recent rally in Pittsburgh. “Why do you even need 100?”

Erik Gordon, division director of entrepreneurial studies at the University of Michigan's Ross School of Business, said a Trump presidency could also lead to less scrutiny from regulators. That could give Musk “more freedom to develop advanced technologies — one of his favorite things to do,” Gordon said.

Tesla is at a pivotal moment as investors eye Musk's commitment to gain fully autonomous vehicle approval in Texas and California. However, ongoing investigations into Tesla's self-driving technology by government agencies, including the National Highway Traffic Safety Administration, could derail the company's autonomous plans.

During a recent earnings call, Musk indicated that if there was a state efficiency commission, he would help advance the federal approval process with a “federal autonomous vehicle approval process.”

For SpaceX, Trebbi said a Trump presidency could help the company secure major contracts with the Defense Department. That could help it maintain its lead over rivals like Blue Origin.

Musk under Harris

While Musk could gain power, government contracts and looser regulations under Trump, it is unclear what impact this could have on him under a Harris administration.

A key policy on the minds of many business leaders is Harris' proposed tax plan. Their goal is to raise the corporate tax rate from 21% to 28% – a move that Bank of America estimates could lead to a 5% drop in profits. Combined with the possibility of stricter regulations, this could impact a number of companies, including those owned by Musk.

Gordon said Harris could introduce new safety regulations or introduce tax credits for electric or AV vehicles that favor competition.

For X, which Musk has branded as a free speech platform, Gordon said a Harris administration could pressure it to ban material flagged as “misinformation.” However, Gordon said that X would most likely win in First Amendment courts.

Tevi Troy, a senior fellow at the Bipartisan Policy Center, said it was unlikely — and most likely illegal — that Harris would send orders to target Musk. However, it is possible that Musk will face “selective enforcement,” said Troy, who is also a former senior White House adviser.

“One would hope that government units would be immune to political pressure,” Joan MacLeod Heminway, a law professor at the University of Tennessee, told BI. “But the people in these units are human and may inadvertently consider proposals from companies owned or controlled by Elon Musk.”

It's also possible that nothing significant would change for Musk under a Harris administration.

“We don't have any clear indications that Harris wants to greatly expand regulatory burdens,” Cary Coglianese, a law professor at the University of Pennsylvania and director of the Penn Program on Regulation, told Business Insider.

Tom Narayan, an analyst at RBC Capital Markets, said a Democratic administration could be better for Musk because Harris supports the Inflation Reduction Act and manufacturing in Mexico, which Trump has opposed.

The IRA offers Musk significant benefits, including a $7,500 tax credit for new electric vehicles that Tesla supports. It also offers tax credits for solar installations.

Karoline Leavitt, the Trump campaign's national press secretary, told BI that if elected, President Trump would support the auto industry by “making room for both gasoline-powered cars and electric vehicles.” However, he plans to scrap the Green New Deal and remove unspent funds from the Inflation Reduction Act to “quickly defeat inflation and lower all prices.” Leavitt said.

Musk is playing a risky game

Given that Musk has said in the past that he supported Democrats, Trebbi said he could ally with Trump to secure the administration's support.

“I view Musk’s realignment with the Republican Party as a risk-hedging strategy designed to preempt government regulation/maintain government support no matter who wins in November,” Trebbi said.

Coglianese also said it's possible Musk sees himself as the one who can “turn the federal government around,” similar to his approach to taking over Twitter.

“It's also entirely conceivable that he simply sees himself as someone who can be a savior,” Coglianese said.

But Coglianese said the strategy of aligning with Trump was risky.

“He's betting on a president who wants or is willing to repay Musk's loyalty,” Coglianese said, adding that it's not always clear that even his strongest supporters get everything they want.

Carl Icahn secured some EPA relief during his first term as an adviser to Trump, but his tenure ended in controversy, Coglianese said. The billionaire investor stepped down from his unpaid role amid criticism of possible conflicts of interest.

Other cases have turned out more favorably. Trump previously said Tim Cook was the only CEO who called him directly when he had a problem. The Apple CEO secured an iPhone tariff exemption with the former president.

“There are ethical rules that require compliance with various types of obligations, including conflict of interest reporting, for certain types of government positions,” Heminway said. “Elon Musk may not want to take on these obligations.”