On Friday, the White House announced that Tesla (NASDAQ:TSLA) CEO Elon Musk, along with some other executives from major U.S. companies like Ford, General Electric, and Lockheed Martin, will join President Trump's new council to meet regularly for advising the president on manufacturing policy, reports CNBC. Musk's appointment to the council further strengthens ties the electric-car maker CEO has been forming with the new president in recent months.
Why it's notable
Friday's announcement of Musk's appointment to the new council further reinforces how the president is giving Musk his ear. One of the first instances when Musk was given access to the president was in December, when he was invited, along with other major tech executives, to Trump Tower in New York City to Trump's Tech Summit. After attending the meeting, Musk was also reportedly scheduled for a private meeting with Trump and Apple CEO Tim Cook.
Also in December, Musk was appointed to Trump's Strategic and Policy forum, which, according to a press release, includes "some of America's most highly respected and successful business leaders" who "will be called upon to meet with the President frequently to share their specific experience and knowledge as the President implements his economic agenda."
The access the president is giving Musk is notable, particularly since many of the other executives appointed to these councils represent much larger companies, many of which have market capitalizations of over $100 billion. Indeed, of the executives at Trump's Tech Summit, every company represented had a market capitalization of $150 billion or greater. Tesla's market capitalization is $40 billion.
In another display of a strengthening relationship with the president, Musk, this week, also surprisingly said he believed former ExxonMobil CEO Rex Tillerson "has the potential to be an excellent Sec of State." Considering Tillerson's obvious ties to the oil industry, which could potentially clash with Musk's hopes for a revenue-neutral carbon tax, Musk's support for Tillerson speaks to his willingness to be open to the Trump Administration's ideas and strategies.
Can Tesla benefit?
For Tesla investors, the question is whether all this will actually benefit the company. With Tesla being in the business of selling electric cars, energy storage solutions, and solar panels, the company's mission is tied directly to preventing climate change, something Trump and Musk haven't seen eye-to-eye on. But these new ties may be mitigating some investor fears of sudden political action that could hinder Tesla's businesses. However, it will be the Trump administration's actions -- and not its relationship with Musk -- that will matter in the end.
Meanwhile, investors seem to at least be giving some weight to Musk's growing ties to the president. The stock has surged about 38% as Trump increasingly gives Musk his ear.
The area in which Tesla looks positioned to benefit most from the Trump Administration has less to do with the electric-car maker's sustainable energy agenda and more to do with Tesla's significant emphasis on U.S. manufacturing. Excluding contractors, Tesla has created over 13,000 jobs in the U.S., most of which are manufacturing related. And the company's 2016-acquired SolarCity has created about 12,000 U.S. jobs.
Further, Tesla says its under-construction Gigafactory will employ about 10,000 people at peak production and indirectly create about 20,000 to 30,000 additional jobs in surrounding regions. Tesla's growing U.S. manufacturing presence is directly aligned with one of the president's top priorities to create more domestic manufacturing jobs.