Shares of Tesla Inc. (TSLA) skyrocketed on Monday, surging 5.62% as investors grew increasingly optimistic about the potential benefits for the electric vehicle maker following the victory of Donald Trump in the U.S. presidential election. The stock rally was primarily driven by the close relationship between Tesla CEO Elon Musk and the president-elect, as well as Musk's vocal support and substantial financial contributions to Trump's campaign.
According to reports, Musk, a billionaire entrepreneur, endorsed Trump's bid for the presidency and donated at least $119 million to a pro-Trump campaign effort. This has raised expectations among investors that a Trump administration could implement business-friendly policies and deregulation measures that would directly benefit Tesla and Musk's other ventures, such as SpaceX and Neuralink.
Analysts suggest that Musk's influence with Trump could potentially enrich his companies, including Tesla. There is speculation that Trump may appoint Musk to lead a proposed government efficiency commission, further strengthening their alliance. This move could potentially provide Musk with a platform to shape policies and regulations in favor of his businesses.
Additionally, Musk's support for Trump is seen as a strategic move to hedge against potential risks, as the market believes a Trump presidency would be an overall negative for the electric vehicle industry due to the potential removal of EV subsidies and tax credits. However, some analysts argue that a reduction or elimination of EV incentives could actually benefit Tesla by weakening competition from smaller, less-established EV manufacturers.
While the implications of a Trump presidency for the EV industry remain uncertain, investors appear to be betting that Musk's close ties to the president-elect will provide Tesla with a competitive advantage and a more favorable regulatory environment, fueling the company's growth and market dominance.