Top Trumps - the rise of Elon Musk

It has been a good week for Elon Musk.

The world's richest man has been appointed by US President-elect Donald Trump to lead the Department of Government Efficiency.

Shares in Tesla surged adding almost €250 billion to the value of his company, and his preferred cryptocurrency, Dogecoin, soared.

And on Friday, he posted on his social media platform, "I think this will be the most transformative presidency, perhaps since the founding of the country. It's going to be a revolution!"

Musk has been enjoying the hospitality at Trump's Mar-a-lago resort in Florida since US voters elected the next President of the United States earlier this month.

"I can't get him out of here," President-elect Trump teased.

"He just loves this place. And I like having him here."

Musk is involved in a number of meetings at the ocean front property and appears focused on preparing for new role which he will officially take up when Trump returns to the White House in January.

DOGE

The relationship between the tech billionaire and 'the Donald' has warmed significantly in a relatively short space of time.

Musk has said that he voted almost exclusively for Democrats since becoming a US citizen in 2002.

Trump accused him of lying about who he voted for in the 2020 election, and in July 2022, Musk tweeted, "I don't hate the man, but it's time for Trump to hang up his hat & sail into the sunset."

However, when the White House held an electric vehicle summit in 2021, the CEO of one of the world's biggest EV maker expected an invitation, but he was snubbed.

Relations with the Biden Administration were also soured over the President's support of unions. Musk did not want Tesla workers to organise.

He focused his attention on the Republican nominee instead.

Musk is reported to have donated at least $75m to the effort to re-elect Trump.

It could prove to be a very smart investment.

He now has the ear of the next US President - the leader of the world's biggest economy.

He has also been rewarded for his campaign contribution with a role in the Trump administration, leading up the Department of Government Efficiency, or 'DOGE' for short.

The department will not be an official government agency.

It's role, according to Trump, will be to "provide advice and guidance from outside of Government".

The advisory board's main objective will be to "dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures and restructure federal agencies."

The advisory group could provide a potentially friendlier regulatory regime that may help his businesses.

It could give Musk power to regulate the regulators.

His companies are facing at least 20 federal investigations which are unlikely to be pursued with Musk as head of DOGE.

Last year, his companies were promised €3bn across nearly a hundred different contracts. Those deals now look secure.

Musk is also the owner of SpaceX and stands to make billions from US government space contracts.

This week, Trump said DOGE will issue reports on its work to streamline the US government, while Musk said the advisory group would post its "actions" for public comment.

"They will be coming out with individual reports and a big one at the end," the President-elect said in a speech at Mar-a-Lago.

Dogecoin

Yes, the anacronym for Department of Government Efficiency is DOGE, which is also the first four letters of Musk's preferred cryptocurrency, Dogecoin.

Tesla and SpaceX both accept Dogecoin for some purchases.

Musk once vowed to send the meme-based Dogecoin "to the moon."

That's been the trajectory of cryptocurrencies this past week.

Bitcoin topped $90,000, rising by more than 80% this year. Some traders forecast $100,000 in the wake of Trump's presidential victory and Musk's elevation to lead DOGE. Others urge caution.

Dogecoin surged 18% this week, rising more than 150% since election day to reach a 2-year high.

On the campaign trail, Trump pledged to make the US "the crypto capital of the planet".

The expectation now is that Trump's economic team will be crypto-friendly, and with Musk as head of DOGE, that's likely to be the case.

That's welcome news for the crypto industry which has long fought efforts to regulate cryptocurrency, which largely operates in a legal grey area.

Tesla

Shares in Tesla soared 34% since Trump's decisive win, before taking a fall on Thursday following a Reuters report that the President-elect would eliminate $7,500 purchase tax credits for electric vehicles.

Many analysts view the rollback on the credit as neutral for Tesla and its share price began to recover by Friday.

The €250 billion that had been added to Tesla's value has led Wall Street to urge caution.

The market's reaction to Trump’s victory has been described as 'explosive' for Tesla.

While there’s potential for benefits under a Trump administration, the current rally seems overheated in the short-term, according to Adam Sarhan, CEO of 50 Park Investments.

There are many political and economic factors under a Trump presidency that could impact the fundamentals of Tesla.

The move to eliminate the tax credit for EVs has already had a short impact, while reversing other EV-friendly policies put in place by the Biden Adminstration could also have a sharp shock.

Trump has promised to put tariffs on Chinese imports which will impact the price of Chinese manufactured EVs in the US, possibly giving Tesla a lead in the market.

Tesla, like other carmakers, has seen a slump in sales with consumer sentiment low when it comes to big purchases.

There are some proposed policies that could prove favorable to Tesla, such as streamlining federal rules on self-driving cars.

Even if the bromance between Trump and Musk continues, some analysts remain skeptical that Tesla will beneift.

X

The social media platform X is worth significantly less than it was when it was known as Twitter and bought by Musk more than two years.

X no longer trades publicly after Musk paid $44 billion to take it private in October 2022.

A month before the presidential election, investment giant Fidelity estimated that it's value had dropped by almost 80%.

However, it's role in securing Trump's second term in office was invaluable.

During his last presidency, Trump tweeted regularly, but was banned from Twitter in the final days of his term in 2021.

Musk lifted the ban in August 2023, and Trump's first post on X was of his mugshot with the words, 'Election interference, never surrender'. It was reposted by Musk.

Earlier that year, President Joe Biden tweeted his support for the Philadelphis Eagles who were up against the Kansas City Chiefs in the Super Bowl.

The tweet was seen 29 million times, while a tweet by Musk was seen 9 million times.

The story goes that Musk left the game early, called a meeting of engineers at Twitter and got them to change the algorithm to inflate the reach of his own tweets.

It meant that Musk could control the narrative on the platform. Even people who don't follow Musk on X, still see his posts which are given prominence.

Advertisers have expressed concern at the level of hate speech on the platform since by bought the company.

Last year, a number of advertisers pulled ads from X after Musk reposted an anti-semitic post. Musk told advertisers at an event on stage, "Go f..... yourself".

In March this year, Musk lost a lawsuit against the Centre for Countering Digital Hate. He had sued the centre after it flagged a rise in hate speech when Musk bought Twitter.

Broadcasting organisations NPR and PBS quit the platform in April 2023, after being branded "government-funded" media. NPR reported only a negligible impact on its traffic.

This week, The Guardian announced that it will no longer post from any of its official editorial accounts on X.

"The US presidential election campaign served only to underline what we have considered for a long time: that X is a toxic media platform and that its owner, Elon Musk, has been able to use its influence to shape political discourse," the editor-in-chief Katharine Viner said.

She said the benefits of being on X are now "outweighed by the negatives".

The announcement was met with caustic comments from Musk who described the publication as "irrelevant" and a "laboriously vile propaganda machine".

Meanwhile, Musk is trying to keep X relevant.

He has started hiring for the Department of Government and Efficiency, and candidates must have an X subscription if they want to submit their CV.