Al Root
The State Department will buy Tesla Cybertrucks.
It's another thing investors will have to evaluate -- to see if it can affect shares of the electric vehicle maker.
The 2025 procurement forecast for the State Department was released. It includes $500 million for "Armored Electric Vehicles." Prior versions were called armored Cybertrucks, according to earlier reports.
The State Department and Tesla didn't immediately respond to a request for comment.
It's hard not to see a potential conflict of interest. Tesla CEO Elon Musk is running President Donald Trump's Department of Government Efficiency, and Musk backed Trump's presidential campaign.
Musk, in the past, has pointed out that Tesla doesn't get direct support from the federal government. Purchase tax credits for electric vehicles are available to any auto maker. Zero-emission vehicle credits come mainly from California air quality regulations. What's more, those payments are from other auto makers looking to avoid fines.
The State Department buying Cybertrucks will make it difficult for him to repeat the claim.
Musk's rocket company SpaceX is, of course, a government contractor -- the federal government has paid it some $20 billion since 2008.
The largest awards were for taking astronauts to and from the International Space Station and resupplying the ISS. SpaceX has also won contracts to build a lunar landing vehicle and provides launch services to the Defense Department.
SpaceX could represent another potential conflict of interest, but SpaceX is also the dominant and lowest-cost provider of launch services on the planet. If someone wants to put something into space, they have to check in with SpaceX.
Musk's potential conflicts of interest in the government are, frankly, everywhere -- including the EPA, NASA, Transportation Department, Defense Department, and now State. Musk does a lot of things.
Investors are just going to have to be ready to hear surprising stories and evaluate the impacts. Even Barron's recently wrote that Cybertruck purchases by the government were a possibility, adding "stranger things have happened." This is definitely one of those stranger things.
To some extent, Cybertruck purchases of $500 million are a political story versus a stock story. That amount of sales over five years just isn't that significant for a car company. Tesla is expected to generate roughly $110 billion in sales in 2025. General Motors is expected to generate about $185 billion.
Still, everything Musk does has the power to affect Tesla's brand and the perception of it. What's more, investors expect Musk's relationship with Trump to benefit Tesla, mainly through the facilitation of self-driving car regulations that will help the EV maker launch a self-driving robotaxi service.
Tesla stock was up 3.1% in early trading Thursday at $347.02. The S&P 500 and Dow Jones Industrial Average were rising 0.2% and 0.1%, respectively.
Coming into Thursday trading, Tesla stock was up about 34% since the presidential election on Nov. 5 and down about 21% since the inauguration on Jan. 20.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
February 13, 2025 09:45 ET (14:45 GMT)
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