It was a quiet end to the week for Tesla Motors stock—until traditional auto makers did something surprising.
Shares of the electric-vehicle maker added 3.8% on Friday, closing at $352.56. In comparison, the S&P 500 and Dow Jones Industrial Average were up 0.4% and 1%, respectively.
Shares closed at a new 52-week high Friday and hit a new intraday 52-week high of $361.53. Shares finished up about 4% from the lows of the day at about $338 apiece.
One factor that seemed to help was EV credits. The automotive lobbying group Alliance for Automotive Innovation, which represents many traditional auto makers, is leading efforts to keep the EV purchase tax credits around. The incentives, which takes up to $7,500 off qualifying EV purchases were likely on President-elect Donald Trump’s chopping block.
Traditional car companies don’t make money selling EVs, but they do make a lot of money selling traditional cars. Investors might assume Tesla would want the credits more than General Motors or Ford, but there are a couple of reasons the overall auto industry prefers to keep the credits.
For starters, car companies don’t like dealing with rapidly changing policies. They commit billions over decades to plan product lineups. It isn’t easy to turn on a dime.
Second, auto makers see a trend. BEV adoption has gone slower than most investors, analysts, and companies expected, but BEV penetration of new car sales is still moving higher.
“Battery-electric vehicles are coming, with or without the credit,” says Freedom Capital Markets analyst Mike Ward. “I’m sure manufacturers want to keep the credit…for BEVs to be successful the manufacturers need the vehicles to be profitable,” he adds.
Credits, which lower the price for consumers, help with that.
Credits or not, investors believe Tesla will benefit from CEO Elon Musk backing Trump’s successful presidential bid campaign. While Trump might still eliminate EV purchase tax credits—which would make EVs, including Teslas, less affordable—he is also likely to set a federal standard for regulating self-driving cars, making it easier to put the technology on the roads.
Through Friday trading, Tesla stock was up by more than $100 a share since the Nov. 5 election, adding some $325 billion to its market value.
Trading has been wild, to say the least. Since the election, Tesla shares have moved an average of about 5%, up or down.
Tesla stock added about 10% for the week. Shares jumped almost 8% on Monday and Tuesday, following reports about Trump’s plan for autonomous vehicle regulation. Tesla stock followed that up with two small losses on Wednesday and Thursday.
Recent gains left Tesla stock trading north of 100 times estimated 2025 earnings. That’s the highest valuation ratio since early 2022, according to FactSet.
