My business and economic predictions for 2025, from the bust-up of the Trump-Musk bromance to more European car agony

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It’s that time of year again. Herewith are my economic and business predictions for 2025. Making them is harder than usual, given the capricious nature of U.S. president-elect Donald Trump and the wars raging throughout the Middle East and in Ukraine. I mean, we could be one incremental tariff away from a trade war or one sunken supertanker away from an oil (and environmental) crisis, at any moment.

Back to black

Remember when BP, one of the world’s biggest oil companies, rebranded itself as “Beyond Petroleum”? That was more than 20 years ago and was designed to reposition the former British Petroleum as a broad-based energy company, with a focus on renewable power. Yes, oil and natural gas would still be part of the mix, but in ever-declining proportions. Ditto another supermajor, Shell SHLL-P-X, whose goal, set in 2019, was to become the world’s top electricity company.

But never mind. BP’s on-again, off-again transformation has been quietly winding down in recent years; in 2024, for instance, the company placed its offshore wind business in a joint venture, allowing it to cut billions from its capital spending on that project. Shell, meanwhile, is ditching its electricity businesses in Britain, Germany, China and elsewhere, and is downgrading its offshore wind ambitions. Why is this happening?

My theory is that the Boeing fiasco drove home the message that companies that stray from their core competencies get into trouble. Boeing BA-N placed its focus on financial engineering instead of engineering the safest aircraft – see the Boeing 737 Max disasters – and lost half its value in four years. Shares of BP and Shell fell in 2024, while those of Exxon XOM-N, which resisted the green lunge, rose. In 2025, expect more oil companies to retreat to what they do best. The reversal does not mean that the decarbonization agenda is dead (though it doesn’t help); it does mean that Big Oil will let the renewables experts dominate the black-to-green game.

The Trump-Musk bromance goes bust

The love affair between Donald Trump and Tesla boss Elon Musk, the world’s richest man and leader of the Department of Government Efficiency (DOGE), will end some time in 2025. The two egomaniacs are bound to butt heads at some point, all the more so since social media is gleefully depicting Mr. Musk as “president-elect Musk,” which must drive Mr. Trump nuts.

But fighting over more mundane issues, such as tariffs, might trigger the end of the bromance. Mr. Trump loves trade barriers – he has called tariffs “the most beautiful word in the dictionary” – and has threatened to slap them on pretty much every country, including 25-per-cent tariffs on all imports from Canada and Mexico, and an additional 10 per cent on Chinese goods, to stop job “theft.”

Mr. Musk seems to have a different view. In November, he praised the move by Javier Milei, the government-slashing President of Argentina, to cut import taxes as a “good move.” Low tariffs have certainly helped electric-vehicle maker Tesla TSLA-Q become the world’s most valuable car company. China is Tesla’s second-biggest market, and an essential source of batteries and other EV components. Mr. Musk wouldn’t want to see a global trade war, which could happen if Mr. Trump seeks revenge on countries with fat trade surpluses with the United States.

We, the few and fewer

Speaking of batteries, there’s no doubt that the big mining companies that produce battery metals – copper, lithium, cobalt and nickel, among them – will want more of each. And that means 2025 will see another round of mergers and acquisitions, or at least attempts.

In 2024, Glencore completed the takeover of Teck Resources’ TECK-B-T coal division, allowing Teck to emerge as a near-pure copper company; Australia lithium producer Allkem finished merging with U.S. chemicals giant Livent to create a lithium producer with a US$5.6-billion market value; and BHP, the world’s biggest mining company, made three attempts to buy rival Anglo American, each of which failed.

Up next? Mining executives think Anglo can’t keep saying no and will lose its independence later this year, once it finishes a restructuring that will see the sale of its De Beers diamond business, among other divisions, to focus on copper and iron ore. BHP might take another shot at it, but it would face competition. Rarity value could see the winning takeover offer land at well north of Anglo’s market value of £32-billion (about $57.9-billion). A key attraction is the company’s 44-per-cent share of the Collahuasi mine in the Chilean Andes, one of the world’s top copper reserves.

The amazing shrinking car acts

European carmakers had a dismal 2024, and 2025 will bring more of the same – or worse. Volkswagen and Stellantis, owner of the Jeep, Fiat and Citroen brands, were among the biggest losers of the year, with consumer demand waning quickly and the vast Chinese market going into reverse for them. VW’s battery ambitions took a blow in November, when part-owned Northvolt, the Swedish company that was to put Europe on the car-battery map, filed for bankruptcy. At the same time, VW made plans to close three German plants, though a tentative union agreement struck just before Christmas to eliminate 35,000 jobs may commute the factories’ death sentence.

With China coming on strong in the EV market and building car plants everywhere, from Hungary to Mexico, the European automakers will remain under pressure in their domestic and export markets. They can’t win. Their costs are too high, and they allowed China to dominate the sales of cheapie EVs. German EVs are tech wonders, but they remain largely rich families’ toys.

Spare the nukes

In 2023, Germany closed the last three of its nuclear power plants – in the middle of an energy crisis, no less, when imports of Russian natural gas had largely stopped and energy prices had soared. The decision was considered borderline insane by clean-energy advocates and captains of industry, who wanted reliable energy supplies devoid of big price swings. Germany once had 19 nukes that supplied a third of the country’s electricity; they were killed off even though they had operated without major safety incidents.

Germany is going to the polls in early 2025, and it looks like Chancellor Olaf Scholz and his Social Democrats are doomed. The opposition party alliance, made up of the conservative CDU and CSU parties, have called for a study to see if some of the nukes could be reactivated. Next year could see the start of a nuclear revival in Europe’s biggest economy.