New Delhi — The electric vehicle industry is closely watching to see how Tesla boss Elon Musk, who played a key role in the victory of Republican President-elect Donald Trump, will use his influence with the incoming president to steer the industry’s future. At stake are several issues including the new administration’s approach to tariffs on Chinese EVs and tax credits. In anticipation of decisions favorable to Tesla, shares in the company rose 27% after the election result was announced, taking its market capitalization to $1 trillion. During the campaign, Trump said he would increase tariffs on Chinese goods and roll back tax credits available to EV buyers in the U.S. He also vowed to reduce or eliminate many vehicle emissions standards under the Environmental Protection Agency, which support the EV industry. Industry analysts are divided on whether high tariffs on Chinese EVs are advantageous or disadvantageous for Tesla’s business. Some analysts have suggested that Musk could persuade the Trump administration to reduce the tariffs on Chinese EVs and might even temper the overall tariff regime against Chinese goods. However, Musk is likely to support the elimination of the $7,500 tax credit given to EV buyers in the United States. The absence of tax credits would make it difficult for legacy carmakers to introduce EV versions of their cars in competition with Tesla. “As Elon Musk played a very important role in funding Trump’s campaign, he will no doubt have the ear of the U.S. president and play a role that will help shape policies that are advantageous to Tesla and his other businesses,” Bill Russo, founder and CEO of Automobility Limited, a Shanghai-based strategic consulting and investment platform, told VOA. To be sure, Musk opposed U.S. tariffs on China-made EVs last May. “Neither Tesla nor I asked for these tariffs. In fact, I was surprised when they were announced. Things that inhibit freedom of exchange or distort the market are not good,” Musk said after the Biden administration enhanced tariffs on Chinese EVs. The question is whether he will continue to oppose tariffs on Chinese EVs after Trump enters the White House. A section of analysts has predicted that Musk would continue this line of argument because China accounts for one-third of Tesla sales. “Tesla is in China because Elon Musk needs the scale and efficient cost structure of the Chinese supply chain to make the company more competitive around the world,” Russo said. China makes over 70% of the EV batteries in the world and almost two-thirds of all EVs and related components. “Tariffs make accessing this supply chain more costly, and that does not help Tesla,” he said. Between January and May this year, Tesla sold almost as many cars in China as it did in the United States. Chinese consumers bought one-third of Tesla cars of all models totaling 513,644. In the same period, the company sold 522,444 vehicles in the U.S. Wedbush Securities analyst Dan Ives argued that higher tariffs would help Tesla compete better with Chinese EVs in the U.S. market. “Tesla has the scale and scope that is unmatched in the EV industry and this dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players (BYD, Nio etc.) from flooding the U.S. market over the coming years,” Ives said in a note to clients this week. Taking a different view, Beatrix C. Keim, director of Germany-based Centre Automotive Research, said the next president is unlikely to listen to arguments for reducing tariffs on Chinese EVs. “There is a 100% tariff for Chinese EVs in place. I don’t think that Trump will weaken this,” she said. The high tariff does not affect Tesla because it does not export cars from its Shanghai plant for the U.S. market, and builds them in the U.S. Keim said Musk will do whatever serves Tesla’s business in China. “Chinese people are very likely to react emotionally if he is perceived as acting against China’s interest,” she said. “Chinese customers had once blocked the sales of Tesla cars, and this can happen again.” Musk said last April that he loved the Chinese people. “I’m a big fan of China. I also have a lot of fans in China. Well, the feelings are reciprocated,” Musk, who has often been described in Chinese social media as a “friend of China,” said in April. Tesla is set to introduce a new fully self-driving (FSD – Supervised) car in the coming months, though the vehicle’s safety remains under review. Musk must have sufficient influence in both Washington and Beijing to obtain the regulatory approvals necessary to sell it. “China is likely to approve FSD as it would like to show goodwill toward foreign technology,” Russo said. However, Tesla’s FSD may have a limited market in China where local manufacturers play a much bigger role. Keim said Tesla’s FSD might not face regulatory challenges in Europe, but it may be difficult for it to find enough customers in the face of local competition. One of the questions that is often asked is whether China would retaliate by imposing higher tariffs on American goods, including Tesla. “This is very unlikely, as Tesla has invested in China and is used as an example of how foreign brands are still welcome in China, and Tesla is held up as a benchmark for Chinese companies to measure against,” Russo said. “Killing competition is not viewed as healthy for the forward development of the Chinese automakers. This is in stark contrast to the way the U.S. has acted so far.”