Tesla Inc. shares are going through the roof on Wednesday because investors think that Donald Trump’s second term as president will be good for the company that makes electric cars.
A Republican government might not seem like a good thing for electric vehicle (EV) makers, but according to the Associated Press, Elon Musk, CEO of Tesla TSLA 14.75%, is close with Trump, who won the 2024 election. Musk was with Trump on the night of the election.
As of this morning, Wednesday, Tesla’s price is up more than 12%. Dow Jones Market Data says that the stock is on track to close at $291.26, which would be its best level since July 19, 2023.
In his winning speech, Trump said, “We have a new star, a star is born, Elon.” “What a great guy.”
Trump then called Musk a “super genius” and said, “We have to protect our geniuses.”
Overnight, Wedbush analyst Dan Ives wrote that Trump’s second term could have the “biggest positive” effect on Tesla in the tech industry.
Ives wrote, “We think a Trump presidency would be bad for the EV industry as a whole because the EV rebates and tax incentives are likely to be taken away.”
The change could be “a huge positive” for Tesla, though, he said. “Tesla has the size and scope that no one else has in the EV industry. This could give Musk and Tesla a clear competitive advantage in a world without EV subsidies. This is especially true since China is likely to raise tariffs, which will keep cheaper Chinese EV players from flooding the US market over the next few years.”
If you look at other EV stocks, Rivian Automotive Inc. (RIVN) is down 8.31%, which is 9.0%, and Lucid Group Inc. (LCID) is down 5.33%, which is 4.4%.
Ives said that the Trump administration might also be good for Tesla’s software goals, since the company wants to quickly get government approval for self-driving technologies.
Ives wrote, “We believe a Trump win could add $40 to $50 per share to Tesla’s stock… if autonomous/FSD is accelerated starting in 2025.” He was talking about Tesla’s technology for fully autonomous driving. He also believed that the company’s work with Cybercab robot taxis could be useful.
Musk could also be more involved in government under Trump. In September, Trump said he wants to make a government-efficiency commission as president. Musk came up with the idea, and Trump wanted him to be in charge of the committee.
What would happen to Tesla if Musk took on more government work that would require him to spend less time at the EV maker? That is still unknown.
