Tesla's stock price surged over 15% on Wednesday after Donald Trump won the 2024 U.S. presidential election. The rally was driven by optimism that Tesla and its CEO Elon Musk would benefit from Trump's policies and Musk's close ties to the incoming administration.
Musk emerged as one of Trump's biggest backers during the campaign, donating over $130 million to support his candidacy and vocally endorsing him on social media. In his victory speech, Trump praised Musk as a "super genius" and a "new star," fueling speculation that Musk could play a significant role in the new administration.
Analysts believe that a Trump presidency could be a boon for Tesla, despite the former president's criticism of electric vehicles during the campaign. Wedbush analyst Dan Ives noted that while Trump's policies could be an "overall negative for the EV industry" by reducing tax incentives and rebates, Tesla's scale and market dominance could give it a "clear competitive advantage in a non-EV subsidy environment."
Additionally, higher tariffs on Chinese imports proposed by Trump could effectively limit competition from cheaper Chinese EV makers, further strengthening Tesla's position in the U.S. market. Ives estimated that a Trump win could add $40-$50 to Tesla's stock price and push its market capitalization above $1 trillion if the administration accelerates autonomous driving initiatives.
However, some analysts have cautioned that Musk's growing influence within the Trump administration could also pose risks for Tesla, particularly if it leads to increased scrutiny or regulations aimed at curbing the company's ambitions.
