What does a blue Texas sweep mean for Tesla, SpaceX & Elon Musk?
After a historic election defeat in one of the most expensive elections in US election history, the state of Texas has turned blue. Along with this come potential implications for Elon Musk and his companies.
The US midterm election was yesterday, and ended up in a stunning result, with Democrats taking control of both houses of Congress by wide margins, and flipping seats that had been considered safe around the nation.
Perhaps most notably, many of these seats were in Texas – a republican stronghold which saw a clean sweep, with the Democrats winning every statewide contest. Republicans maintained some state legislative power and won the State Senate, but as of this writing Democrats are currently ahead in the count for the State House.
Despite huge spending, Democrats won almost everything
The highest profile contest was for Texas Senate, where James Talarico won by a 55-43 margin. This race set the record for the most expensive Senate race in the nation’s history, with over half a billion dollars spent on this one seat alone.
About half of the total money spent on the race came courtesy of republican PACs, a method by which companies and the ultra-wealthy can launder money into bribes to buy elections. And most of the PAC money in the race came from one man, Elon Musk, who spent $212 million to support the enormously unpopular and scandal-ridden outgoing Texas Attorney General Ken Paxton
That’s nearly half of the $474 million dollars that Musk put into this election cycle, suggesting that he saw this race of particular importance. And yet, his candidate lost miserably.
But the rout did not stop with Paxton. Paxton’s old job as AG is now going to be filled by Democrat Nathan Johnson. And Greg Abbott, the outgoing Governor, was defeated by Gina Hinojosa. Even the less high-profile races for court seats were swept by Democrats – three seats on the 15th Court of Appeals and four seats on the Texas Supreme Court.
And those results, even beyond the big-spending Senate race, could all matter quite a lot to Elon Musk.
Republicans rolled out the red carpet for Musk in Texas
In 2021, Musk announced that Tesla would move its headquarters to Texas, after Musk got in a spat with California government because he didn’t want to follow COVID restrictions for worker safety.
But the move wasn’t only about COVID restrictions – it was also about Musk’s vision of having more control over the business environment. And, by making allies with Ken Paxton and Greg Abbott, he has had quite a bit of control in Texas.
The two have rolled out the red carpet for Musk, giving him carte blanche in his adopted state.
Autonomous vehicle regulations have been changed, allowing driverless Robotaxis to operate where other states with more advanced regulations and transparency requirements would not. And many other laws benefitting Tesla and SpaceX have been passed. Paxton even sued Sam Altman, Musk’s chief AI rival, just weeks ago.
Perhaps more notably for Musk personally, Texas has promised to allow Musk to get away with more financial shenanigans than states with more established business regulations might.
With Tesla both headquartered and incorporated in Texas, it can now use special “business courts” instituted by Abbott at Musk’s own urging. If cases from these courts are appealed, they go to the 15th Court of Appeals, a court created by Abbott and filled with 3 hand-picked judges, intended to reduce the chance that a Democratic district court (say, one in Austin, whereTesla is headquartered) gets final say on any issue.
Several specific seats overseeing Musk went blue
But, the 15th Court of Appeals just had elections last night – and its three seats were flipped to Democratic control.
The 15th Court of Appeals also, just last week, stopped an inquiry into thousands of pages of emails between Abbott and Musk. The emails had been released, but are heavily redacted, with Abbott referring to the redacted portions as having “intimate” information in them.
And who made that request for inquiry into the emails? Gina Hinojosa, a name you might recognize, as she is the next Governor of Texas, as of last night.
As of yet, those emails have not all been released, so we don’t actually know exactly how much influence Musk was able to exercise over the state’s outgoing Governor. But given the changes we know about, the money Musk spent in Texas, and the thousands of pages of emails that have been redacted, it seems likely that there is something more to be found in them.
What does this mean for Musk’s companies?
So what does this all mean for Tesla, our main area of coverage here at Electrek?
On a Texas state level, probably not all that much. There’s no reason that Democrats in the state would interfere with Tesla’s production of electric vehicles – in fact, they’d probably encourage it more than republicans do. Talarico has stated that he supports Tesla – it is a large employer in the state, after all.
And certainly, the national wins by Democrats could be a boon for EVs, given how hostile republicans have been to them (and Musk has been the single largest supporter of that hostility towards EVs).
The same likely goes for SpaceX – perhaps a blue Texas will be more restrictive of the company’s improper usage of protected habitats, or building of data centers, or whatever the hell is going on on twitter. But the core businesses of space launches and Starlink don’t seem likely to go anywhere.
What does it mean for Musk himself?
For Elon Musk, though, things could be different. Given his “intimate” relationship with Abbott, the extreme amounts of money he spent on Paxton, and the highly personal nature of his truly ridiculous attacks against Talarico, it seems unlikely that he will have a similar level of allyship with Texas government actors as he did in prior years.
And given his high levels of spending on a party that is outright hostile electric vehicles, it seems clear that his personal fortunes are far more important to him than the well-being of his companies.
This is all important to note, because Musk has been working towards a scheme to merge SpaceX and Tesla, a deal which would likely be a detriment to both companies and all of their shareholders. Musk wants the deal so he can exercise more control over, and extract more personal wealth from, the combined entity.
But that scheme could rely on a favorable legal environment in Texas courts, an environment that just got less favorable.
And, given Musk’s penchant for childish lashings-out anytime he deems people insufficiently obsequious to his imagined greatness, could we see another situation where Musk encounters the tiniest amount of pushback from state government and then picks up his toys and leaves, as he already did in both California and Delaware? Time will have to tell. Keep your popcorn buckets primed and ready.
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