Ramstad: Musk, Trump, Congress create an extraordinary moment in America’s business history

Republicans wipe out tax incentives just as Tesla finally puts an autonomous car on the road.

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The Minnesota Star Tribune
July 5, 2025 at 1:00PM
A driverless Tesla Robotaxi moved through traffic on June 22 in Austin, Texas. (Eric Gay/The Associated Press)

Elon Musk and Donald Trump have given Americans a lot of drama this year.

Even this past week, Trump threatened to deport Musk after the Telsa CEO called Trump’s big tax and spending bill “utterly insane.”

If you can look past the politics — and admittedly that’s hard to do — you’ll see they have also brought the country to an extraordinary moment in business history.

With their “One Big Beautiful Bill,” Trump and Republicans in Congress ended the federal government’s tax incentives to buy electric vehicles that began in 2008.

And they did it less than two weeks after Musk’s Tesla finally delivered on his promise of a driverless electric vehicle, with a limited rollout of its Robotaxi ride-sharing service in Austin, Texas.

EVs are at the tip of the spear of global economic competition because they’re likely to displace the century-old standard of gas-powered cars and trucks. They represent peak achievements in computing and mechanical engineering. And their utility no longer bears arguing.

So it is strange and disappointing to see the nation’s leaders act in a way that may discourage America’s competitiveness and leadership in them.

Musk lashed out against the bill in part because of the potential harm to EVs and the clean energy industry. He was also angry about the effect the bill will have on the nation’s deficit and debt after having led the government cost-cutting effort known as the Department of Government Efficiency, or DOGE.

However, Tesla will be just fine without the subsidies, which Musk has acknowledged. The company has about $37 billion in cash and one of the best operating margins in the auto business. Meanwhile, DOGE’s impact has been greatly exaggerated by Musk and the White House.

Most striking to me is the symbolism of the action in Washington. I can’t think of another time when the country’s political leaders shunned an industry in which America held global leadership just when that lead was most threatened by other countries.

China recognizes the change from gas to electric is an opportunity for it to displace the U.S. as the world’s leader in vehicle production and technology.

BYD, its leading EV maker, last year overtook Tesla’s sales in China and is eroding them in Europe.

“A comparable BYD vehicle in China and Europe is about 15% to 20% cheaper than a Tesla,” said Gene Munster, managing partner at Deepwater Asset Management in Minneapolis and a longtime analyst of America’s top innovators.

“They’re essentially selling the car for prices that are impossible for any other carmaker to come close to. The theory is that these [Chinese] companies are being subsidized by the Chinese government,” Munster said. “China looks at what happened to Japan in the 1970s and 1980s and wants to be a global automotive leader.”

Xiaomi, the No. 2 smartphone maker in China, migrated into the EV space and recently rolled out an SUV at a cheaper price than Tesla’s Model Y. Even Toyota, the world’s leading automaker and a latecomer to EVs, has partnered with a Chinese firm to produce a $15,000 EV for the China market.

Trump largely views EVs and clean energy as a threat to existing producers rather than a next step in value and efficiency for the energy industry, automakers and consumers.

His response to the global competition in EVs is to tariff the ones made elsewhere, which insulates U.S. manufacturers and raises the prices Americans pay.

Indeed, the one logical economic argument for ending the government’s subsidies on first-time EV purchases — that they distort prices and consumers’ perception of value — is wiped out by Trump’s love of tariffs.

For all of the oddness in Trump’s aversion to technological advancement and misguided ideas about trade, I suspect history will eventually show that a decision by Musk made the biggest difference on whether the U.S. remains the global leader in automotive industry or loses out to China.

After taking the early risks and reaping the early rewards for creating a mass market for EVs in the United States, Musk several years ago decided not to follow in the footsteps of Henry Ford by pushing EVs down the cost curve and turning them into a truly mass-market item. Tesla even blew by Musk’s latest target of June 30 to introduce a cheaper EV than its current Model 3.

Instead, Musk had Tesla focus on autonomous driving technology, at last visible in Austin, where Robotaxi is initially confined to a small part of the city and a few dozen users. Even so, Tesla’s driverless car may have a cost advantage over the early leader in autonomous vehicles, Waymo.

“If they can deliver on autonomy at a much lower production cost, they can gain some meaningful market share,” Munster said.

And that’s why investors still price Tesla as the world’s most valuable carmaker, even as consumer incentives to buy EVs disappear in the U.S. and market share vanishes in Europe due to Chinese competition and anger over Musk’s politics.

“The fundamentals for Tesla are terrible. Yeah — terrible is the word,” Munster said. “And the stock is doing incredible because investors realize there’s something bigger going on here.”

about the writer

about the writer

Evan Ramstad

Columnist

Evan Ramstad is a Star Tribune business columnist.

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