ALL IN Trump, Musk's "American Election" Business Strategy

Author: Tuo Luo Finance

If we mention what is different about this U.S. election compared to previous ones, the ever-eloquent former President Trump might express numerous grievances, such as the sudden change of leadership among competitors, the lack of fundraising advantages, and personal assassination attempts. However, if asked who he is most grateful for in this election, Musk would undoubtedly be one of Trump's answers.

In this year's election, Musk unexpectedly and resolutely sided with Trump, not only spending $75 million on campaign funding in the third quarter to show his determination but also vigorously campaigning on public platforms. Recently, he even launched a lottery project to rally public support. From both manpower and financial contributions, Musk's efforts can be described as exhausting all possibilities.

Such a clear stance is not a wise move for a highly influential and controversial entrepreneur. In an election where the outcome is uncertain, any misstep could lead to a capsized party ship, and the loser faces not only political failure but also potential risks to personal safety.

Rewind a few years, and Musk and Trump were clearly not on friendly terms. Their verbal sparring often played out on public platforms, with Trump even mocking Musk for begging for subsidies at the White House. What could have led Musk to bury the hatchet and offer such heartfelt assistance?

Amid the precarious undercurrents of the election, the business of money and power is also secretly underway.

01. Momentum Boost, Musk Spends Big for Trump

Not long ago, Trump stated during a speech: "I called Elon, and he gave me the best support." To receive such gratitude from a presidential candidate, Musk's support is naturally significant.

Since clearly siding with Trump in July, describing Musk's spending as extravagant is not an exaggeration. According to data disclosed by the Federal Election Commission, in the third quarter, Musk donated $75 million to the America PAC supporting Trump. Although this amount was anticipated in the market and slightly lower than the previously predicted $45 million per month, Musk has already become the largest donor aside from Trump's staunch supporter and casino heir Sheldon Adelson (who donated $95 million).

From a financial perspective, Musk's help is akin to a timely gift, as Trump has been struggling to raise funds for this election.

Data shows that this year, the Democratic Party has maintained its usual advantageous position, and due to a mid-campaign leadership change, fundraising has become even more unified. Since becoming the Democratic leader at the end of July, Harris has raised $1 billion, and in the third quarter alone, her fundraising committee raised $633 million, four times the amount raised by Trump's similar fundraising department during the same period.

In response, although Trump does not show it openly, he is very dissatisfied behind the scenes. According to the New York Times, at a donor dinner in September, Trump bluntly stated that those involved, including donors, need to do more to appreciate and help him. The meaning of such remarks at a dinner is self-evident. For fundraising, Trump has been working hard, selling tickets for conferences, raising funds for encrypted projects, and opening up various channels, pressuring supporters is also essential. In April, Trump even claimed he would have major oil and gas companies raise $1 billion for him, and in July, he texted his top supporter Adelson asking for a $250 million donation.

However, for the election, money is just the most intuitive factor; while important, large sums of money do not guarantee victory. Beyond funding, Musk's "help" should not be underestimated.

First, Musk, who has 200 million followers and is highly recognizable, controls the large public opinion platform X. Just announcing his support is already provocative. In August, Musk took action by hosting an exclusive Space interview to promote Trump, with millions online firing the first shot of the campaign. Trump also took the opportunity to mend ties with the X platform and continue his usual public relations strategy. Since then, their relationship has become increasingly close, with a strong public relations synergy.

Musk's X platform has 200 million followers, source: X

By October, Trump returned to Butler, Pennsylvania, and held a campaign rally, with Musk invited to join him, wearing a MEGA hat, showing support on stage, and delivering a speech praising Trump's masculinity, creating a scene of mutual prosperity.

Recently, Musk made another big move by randomly selecting one participating voter in Pennsylvania each day to give away $1 million. The petition activity was initiated online by Musk's "American Political Action Committee," calling for support for free speech and the right to bear arms. According to the rules, starting from October 19 until Election Day on November 5, any voter in Pennsylvania, Arizona, Georgia, Michigan, Nevada, North Carolina, and Wisconsin who signs the petition will have a chance to win $1 million each day; the first three days of the "lottery" are limited to Pennsylvania voters, after which voters from all seven states are eligible.

Previously, Musk had launched a campaign for Pennsylvania voters, offering "$100 to participate in the petition, and an additional $100 for referring someone," while for other swing states, it was $47. Not only is there new recruitment, but also a viral effect, showcasing Musk's deep understanding of internet operations. Although it seems like just initiating a petition to defend free speech and the right to bear arms, it is clear that this activity aims to attract supporters of pro-Trump rhetoric, with the ultimate goal of voting for Trump.

Needless to say, buying votes with money carries compliance risks in any country. Even if packaged as a lottery, the plan targeting voters clearly violates prohibitions, and Pennsylvania Governor Josh Shapiro stated that law enforcement should pay more attention to this. Nevertheless, Musk's lottery initiative continues, and two lucky winners have already been selected.

A gentleman does not stand under a dangerous wall, but Musk's actions do not align with this adage. Risking compliance issues to rally support and spending huge sums to stand on stage, not to mention frequently criticizing another candidate as a puppet in public, Musk has already invested too much in this election.

02. From Mutual Attacks to Honeymoon, Musk and Trump's Love-Hate Relationship

That said, what magic does Trump possess that makes Musk go to such lengths to pave the way for him?

Back in 2017, when Trump took office, the relationship between the two was acceptable. Trump once invited Musk to serve as a business advisor at the White House, but the partnership lasted less than six months. After Trump resolutely withdrew from the Paris Climate Agreement, Musk believed that the agreement would hinder Tesla's push for clean energy, leading to their eventual split.

After that, as a representative of technology and immigration, Musk gradually leaned towards the Democratic Party, and his relationship with Trump reached a freezing point, with both sides sparring on social media more than once. In 2022, Musk bluntly stated that Trump should step down, and Trump retorted, "Musk came to the White House asking me to help his projects that rely on subsidies, whether it's electric cars that don't last long enough, self-driving cars that frequently crash, or rockets without a destination. Without those subsidies, Musk would be worth nothing."

Trump also stated, "He told me at the time that he was a loyal fan of Trump and a Republican. If I made him kneel, he would kneel." Perhaps not satisfied enough, he even attached a photo of Musk smiling beside him, full of sarcasm.

In the adult world, there are no permanent enemies, and less than two years later, the two were back in a honeymoon phase. When asked about the reason, Musk responded in an interview that supporting Trump was due to the current Democratic Party's views and values not aligning with his own. The Democratic Party's tolerance of racial diversity has accelerated the division in America. From Musk's slightly populist and authoritarian admiration characteristics, this statement has some rationality, but to make such a 180-degree turn, ideology alone is clearly insufficient; the core reason boils down to one point—interests.

Starting with the core change in Musk's relationship with the Democratic Party, Musk initially supported Biden because he promised to vigorously develop clean energy and support electric vehicle development. Development did occur, but the Biden administration seemed intent on excluding Tesla. In August 2021, the Biden administration organized an electric vehicle summit and signed an executive order at the event, aiming for half of all new cars sold in the U.S. to be zero-emission vehicles by 2030. Interestingly, this event invited General Motors, Ford, and Stellantis but did not invite the largest electric vehicle giant, Tesla. The reason at the time was due to pressure from the United Auto Workers, a long-time ally of the Democratic Party.

Thus, a rift was born, and as Musk's companies continued to grow, conflicts with the government increased over issues such as wealth taxes on billionaires, opposition to union forces, and corporate regulatory policies. During Biden's term, Tesla, SpaceX, and other companies under Musk became targets of at least 20 regulatory investigations or reviews, further fueling the tension between the two.

Musk's companies are under scrutiny from multiple U.S. regulatory agencies, source: New York Times

On the other hand, taking SpaceX as an example, according to the New York Times, last year, SpaceX signed nearly 100 different contracts with 17 U.S. federal agencies, securing $3 billion in funding commitments, making the government SpaceX's largest financial backer.

However, just last month, the Federal Aviation Administration (FAA) initiated a process to fine SpaceX $633,009, citing that the company violated licensing requirements during two launches in Florida last year, jeopardizing safety. Recently, during the Starship's test flight, the FAA delayed the test flight for several weeks, citing potential harm to wildlife. Not long ago, the U.S. Department of Justice sued SpaceX again, claiming the company refused to hire refugees and asylum seekers.

In addition to regulatory scrutiny, subsidies are no longer easy to obtain. The Federal Communications Commission (FCC), which oversees SpaceX's launch of internet satellites, revoked SpaceX's application for $886 million in federal funding to provide internet access to rural areas, citing that it was providing services in non-rural areas.

Tesla is no exception; the National Highway Traffic Safety Administration has launched five investigations into Tesla, including complaints about unexpected braking, loss of steering control, and crashes while in "autopilot" mode.

Musk has long complained about this, believing he is being politically persecuted. In 2022, he publicly denounced U.S. regulatory agencies as "jerks." Personal life also played a crucial role; Musk's son's gender transition made him feel that the Democratic Party's ideology was too radical. This incident was a catalyst for Musk's split with California, leading to his subsequent acquisition of Twitter. After a series of events, Musk gradually embraced the Republican Party, officially supporting Trump on July 13 this year.

03. Behind the Support, Dark Currents of Money and Power Trading

Supporting Trump is naturally due to the promises made between the two.

It is worth noting that although Trump's attitude softened after allying with Musk, stating he would support electric vehicles, he was not an electric vehicle enthusiast before this. As a result, environmentally conscious liberals have begun to boycott Tesla. According to data from the California New Car Dealers Association, in California, which is home to a large concentration of liberals and is the largest electric vehicle market in the U.S., Tesla's sales fell by 17% in the second quarter.

So what exactly did Trump promise that made Musk take such significant risks to persist in his actions?

A government efficiency department has thus come to light. Back on August 12, during a conversation between Trump and Musk, Trump mentioned that if elected president, Musk might receive a position in his administration. A few days later, Musk posted an AI-generated image on X, labeled "Department of Government Efficiency," but at the time, the market largely viewed it as just a meme.

On September 5, Trump again mentioned this position, stating he would adopt Musk's suggestion to formally establish a "Government Efficiency Committee" led by Musk. Trump did not provide detailed explanations about the committee's operations, only stating that once established, it would be responsible for "a comprehensive financial and performance audit of the entire federal government," proposing reforms to reduce government spending. On October 18, Musk also disclosed this plan, stating that the department would operate like a company, improving the government's efficiency in using taxpayer funds while streamlining the departments responsible for expenditures.

It seems that introducing external experts to enhance transparency and improve funding efficiency is appropriate, as final expenditures still require congressional approval. Given Musk's past record of cost-saving, this seems fitting. However, upon closer examination of this function, the committee's recommendations could lead to cuts in federal projects, potentially reducing bureaucratic redundancies, effectively taking on the role of a regulatory body. As a long-time contractor for federal projects receiving substantial subsidies, Musk is at high risk of conflicts of interest.

For example, SpaceX once stated in a document, "The paperwork for obtaining government permits for rocket launches takes longer than designing and building the actual hardware." In this case, does the so-called efficiency department have the authority to "suggest" streamlining regulatory laws? Furthermore, does Musk have the capability to reduce contract expenditures for his competitors and the government, thereby allowing his own companies to gain more benefits?

Of course, the operational model of the committee has not been disclosed, but it is certain that the underlying conflicts of interest are already brewing. As for why Trump chose Musk, it is easy to understand. During his previous term, Trump was still a political newcomer. Although Hillary's critical moment led the establishment to turn to Trump for self-preservation, Trump's blunt America First ideology quickly distanced the establishment from him, significantly affecting governance efficiency.

This year, Trump has learned from his mistakes and started cultivating a party more suited to himself, choosing a younger and more controllable Pence as his vice-presidential candidate. Choosing Musk, who has a similar personality, significant influence, and is also a businessman, is also understandable. Musk's counter-selection is similar; in the deeply entrenched Democratic Party, where he has previously faced neglect, it is difficult for him to gain significant roles. However, on the relatively inexperienced side of Trump, the importance is markedly different, and he is more likely to advance further in his political career. The two hit it off, and what appears to the market is a transition from "mutual attacks" to a "honeymoon."

However, their sweet relationship poses a significant threat to the other party. Musk has repeatedly mentioned in public that he does not wish to be involved in politics, stating that he has no choice but to do so; otherwise, if the Democrats come to power, it would threaten his personal safety, even mentioning that the possibility of being assassinated has greatly increased. Whether Musk, who has acquired a public opinion platform and is vigorously siding with Trump, truly has no political ambitions is open to debate, but the prison time that failure could bring is highly likely. If it comes to that, the business platforms Musk takes pride in, such as SpaceX, Tesla, Neuralink, and X, would also be widely affected. In this regard, Musk's frequent emphasis on assassination in public clearly serves to deter the Democrats, perhaps as an important means of self-protection.

It is worth mentioning that Musk, with a net worth of $250 billion, does not hold a large amount of cash flow; his stock assets are his core wealth, with Tesla stock accounting for 60% of Musk's net worth. Therefore, donations for the election and subsequent promotions are not an easy expenditure for Musk.

Ultimately, the reason for expending so much manpower and resources is that this election is a matter of life and death for Musk.

Fortunately, Trump is currently performing well; although the latest polls show Harris with a slight lead at 46% compared to Trump's 43%, in swing states, Trump's support has clearly rebounded. As of October 21, polls indicate that Trump is leading in 8 out of 9 swing states. In the betting market, Trump's winning probability has reached 57.9%, far surpassing Harris's 40.8%, with the crypto prediction market leading Harris by about 30 percentage points. If everything follows the data projections, Trump's assumption of office may just be a matter of time. In response, the crypto market has also reacted, with BTC breaking through $66,000 and DOGE riding the wave of attention.

Of course, it is not yet the end; fortunes and misfortunes are hard to predict, but it is certain that Musk and Trump, this pair of interest brothers, are tightly bound to the same ship.