The United States midterm elections on 3 November changed the arithmetic of American car policy, and the most expensive loser was not on the ballot. Elon Musk, the largest individual donor to the Republican Party, spent close to USD 500 million on the cycle. Texas, where Tesla, SpaceX and a planned chip venture are all headquartered, elected its first Democratic governor in more than three decades.
Democrats picked up seven Senate seats, taking Maine, Iowa, Kansas, Ohio, North Carolina, South Carolina and Texas, several of which Republicans had held for decades. They retained a majority in the House. Two contests, Alaska and Mississippi, were still being counted.
What Congress can and cannot undo
US law is written by Congress, and both chambers must pass a bill before the president signs or vetoes it. Overriding a veto needs two thirds in each chamber. With a bare majority, Democrats cannot legislate a reversal, and analysts expect two years of blockage rather than repeal.
The four items on the administration’s automotive agenda are all now exposed to that blockage: relaxing emissions and fuel economy rules, withdrawing federal support for electric vehicles, raising tariffs on imported vehicles and parts, and declining to extend the North American trade agreement.
The USD 7,500 consumer tax credit for new electric cars was repealed last summer under the One Big Beautiful Bill Act. Restoring it, or reinstating corporate average fuel economy penalties, requires presidential assent that will not be given. The most plausible path is a trade inside a larger budget bill, which is why fleet planners should model the credit at zero.
The Texas problem
Musk’s exposure is concentrated in one state. Texas delivered a Democratic governor, Gina Hinojosa, who has previously sued to disclose correspondence between Musk and Greg Abbott and has called for a halt to new data centre approvals until legislators strengthen resident protections and remove tax incentives. A Senate seat he tried to block went to James Talarico. Estimates put his spending on the Texas Senate race alone at more than USD 212 million.
Data centre permitting is the commercial choke point. SpaceX pitched investors a potential market of USD 28.5 trillion before listing, and the capacity behind that pitch sits in the Colossus and Colossus II clusters near Memphis. Capacity was 1.7 gigawatts at the end of September, with plans for close to 3 gigawatts by year end and 13 gigawatts next year. SemiAnalysis counts more than 9 gigawatts planned or under construction, including a facility at Boca Chica.
A reported discussion about selling a coastal state park to SpaceX has drawn open opposition, with Hinojosa’s line being that Texas is not for sale. Musk’s own response on X was that a data centre in space now looks attractive.
What it means for carmakers
Jake Dollarhide of Longbow Asset Management expects Democratic control to slow rather than stop technology and AI expansion, and he reads the result as a warning to companies that bet on one party. Mainstream carmakers that maintained relationships with both sides came out of the cycle intact. Those that did not now need to rebuild access.
For Chinese exporters and European manufacturers producing in the United States, the practical change is not a new subsidy or a new tariff. It is that both are now slower, less predictable and more negotiable, which raises the value of a manufacturing footprint that does not depend on a single vote.
Editor’s note: This is an adapted translation of the original Gasgoo report. It has been trimmed and restructured for readability for an international business audience. The full original (in Chinese) is at https://auto.gasgoo.com/news/202611/5I70476995C108.shtml.