Tesla (TSLA) saw a significant surge in premarket trading, rising over 12% early Wednesday morning, as investors reacted to Donald Trump’s presidential election victory. Tesla’s CEO, Elon Musk, who supported Trump’s campaign, was prominently mentioned by the president-elect in his victory speech. Trump described Musk as a “super genius,” saying, “We have to protect our geniuses. We don’t have that many of them.”
By 10:05 AM EST, Tesla’s stock had climbed to $278.07, up by $26.63, or 10.59%, according to Nasdaq Real Time Price data. Analysts have attributed this strong market reaction to investor speculation that Trump’s administration could present opportunities and challenges that would uniquely position Tesla to thrive.
Musk’s Campaign Support and Potential Policy Implications
Yahoo Finance previously reported that Musk had contributed over $132 million to Trump’s campaign. While it’s uncertain what direct influence Musk may have on policy, some Wall Street analysts see potential positives for Tesla under a Trump administration.
Wedbush analyst Dan Ives noted that Trump’s policies might shift focus away from the current electric vehicle (EV) tax incentives. Ives suggested that while removing EV subsidies could generally harm the industry, it might work in Tesla’s favor given its significant market share and established position. “Tesla has the scale and scope that is unmatched in the EV industry,” Ives explained, adding that this dynamic could give Tesla a strong competitive edge without relying on subsidies.
Potential Competitive Advantage for Tesla
In addition to changes in EV subsidies, analysts speculate that Trump’s policies could lead to heightened tariffs on Chinese-made electric vehicles. Such a policy would likely impact Tesla’s competitors, such as Chinese EV companies Nio and BYD. In anticipation of this possibility, Nio’s stock dropped 6% premarket, while BYD shares fell by 3.8% in Hong Kong.
Ives highlighted that Tesla’s established production capacity and market dominance would make it well-equipped to handle a competitive environment without subsidies. Furthermore, higher tariffs could limit the entry of lower-cost Chinese EVs into the U.S. market, which would work to Tesla’s advantage by reducing price-based competition.
Impact on Full Self-Driving (FSD) Initiatives
Ives also suggested that a Trump administration could potentially fast-track the adoption and regulatory approval of Tesla’s full self-driving (FSD) technology. This push could be beneficial to Tesla’s revenue stream and stock valuation. “We believe a Trump win could add $40-$50 per share to Tesla’s stock,” Ives wrote. He projected that if autonomous driving regulations progress quickly, Tesla’s market cap could surpass $1 trillion, especially if FSD accelerates starting in 2025.
Read: Brilliant Hiring Philosophies: Insights from Visionary Leaders
Conclusion
As Tesla continues to lead in the EV sector, a favorable policy environment under Trump’s administration could strengthen its competitive position. Despite potential regulatory rollbacks affecting EV subsidies, Tesla’s scale and innovative initiatives, such as FSD, may provide a unique advantage. Investors are watching closely as the administration takes shape, hoping that Musk and Tesla will benefit from the new political landscape.