After a historic election loss in one of the most expensive elections in American electoral history, the state of Texas has turned blue. Along with this, there are possible implications for Elon Musk and his companies.
The US midterm elections took place yesterday and ended with a surprising result: Democrats took control of both houses of Congress by large margins and flipped seats that had been considered safe across the country.
Perhaps most notably, many of these seats were in Texas, a Republican stronghold that scored a big victory, with the Democrats winning. each state level 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 race was for the Texas Senate, where James Talarico won by a margin of 55 to 43. This race set the record for the most expensive Senate race in the nation’s history, with more than half a billion dollars spent on this seat alone.
About half of the total money spent in the race came from Republican PACs, a method by which corporations 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 hugely unpopular and scandal-plagued outgoing Texas Attorney General Ken Paxton.
That’s almost half of the $474 million Musk invested in this election cycle, suggesting he considered this race particularly important. And yet, their candidate lost miserably.
But the defeat did not end Paxton. Paxton’s former position as attorney general will now 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 matter a lot to Elon Musk.
Republicans roll out the red carpet for Musk in Texas
In 2021, Musk announced that Tesla would move its headquarters to Texas, after Musk had a dispute with the California government because he did not want to follow COVID restrictions for worker safety.
But the move wasn’t just about COVID restrictions: it was also about Musk’s vision of having more control over the business environment. And, by allying himself 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 status.
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 have been passed that benefit Tesla and SpaceX. Paxton even sued Sam Altman, Musk’s main AI rival, just a few weeks ago.
Perhaps most notable for Musk personally is that Texas has promised to let Musk get away with more financial shenanigans than states with more established business regulations.
Since Tesla is headquartered and incorporated in Texas, it can now use special “commercial courts” instituted by Abbott at the behest of Musk himself. If cases from these courts are appealed, they go to the 15th Court of Appeals, a court created by Abbott and composed of three hand-picked judges, intended to reduce the chance that a Democratic district court (say, one in Austin, where Tesla is based) will have the final say on any issue.
Several specific seats supervising Musk turned blue
But the 15th Court of Appeals held elections last night and all three of its seats went to Democratic control.
The 15th Court of Appeals also, just last weekhalted an investigation into thousands of pages of emails between Abbott and Musk. The emails were released, but they are heavily redacted, and Abbott refers to the redacted portions as containing “intimate” information.
And who made that request to investigate the emails? Gina Hinojosa, a name you may recognize as she is the next Governor of Texas, as of last night.
So far, not all of those emails have been released, so we don’t know exactly how much influence Musk was able to exert on 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 all this mean for Tesla, our main coverage area here at electrek?
At the Texas state level, probably not so much. There is no reason for state Democrats to interfere with Tesla’s electric vehicle production; in fact, they would probably encourage it more than Republicans. Talarico has stated that he supports Tesla; After all, it is a large employer in the state.
And certainly, Democrats’ national victories could be a boon for EVs, given how hostile Republicans have been toward them (and Musk has been the biggest supporter of that hostility toward EVs).
The same probably applies to SpaceX: perhaps a blue Texas will be more restrictive regarding the company’s misuse of protected habitats, or the construction of data centers, or whatever is going on on Twitter. But the core space launch and Starlink businesses don’t seem likely to go anywhere.
What does this mean for Musk himself?
However, for Elon Musk things could be different. Given his “intimate” relationship with Abbott, the enormous amounts of money he spent on Paxton, and the very personal nature of his truly ridiculous attacks on Talarico, it seems unlikely that he would have a similar level of alliance with Texas government actors as he did in previous years.
And given his high levels of spending in a party that is openly hostile to electric vehicles, it seems clear that his staff Fortunes are much more important to him than the well-being of his companies.
All of this is important to keep in mind, because Musk has been working on a plan to merge SpaceX and Tesla, a deal that would likely be detrimental to both companies and all of their shareholders. Musk wants the deal so he can exert more control over the combined entity and extract more personal wealth from it.
But that scheme could depend on a favorable legal environment in Texas courts, an environment that has just become less favorable.
And, given Musk’s penchant for childish attacks whenever he feels people aren’t obsequious enough to his imagined greatness, could we see another situation in which Musk finds the slightest response from state government and then picks up his toys and leaves, as he already did in both California and Delaware? Time will tell. Keep your popcorn buckets prepped and ready.
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