Tesla's Stock is Soaring Following Trump's Victory. Here's Why Wall Street is So Optimistic

Tesla Inc. shares appeared ready for a significant jump on Wednesday, with investors optimistic about the implications of Donald Trump’s reelection for the electric vehicle (EV) maker. Despite the general view that Republican policies may not fully align with the EV sector, Tesla’s CEO Elon Musk’s strong rapport with Trump seems to be boosting investor sentiment.

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On Election Night, Musk was reportedly with Trump, who won the 2024 presidential race, as confirmed by the Associated Press. Tesla’s stock responded positively to the news, surging over 12% in premarket trading Wednesday. In his victory speech, Trump openly praised Musk, calling him “an amazing guy” and declaring, “We have a new star; a star is born, Elon.” Trump also described Musk as a “super genius” and emphasized the importance of supporting innovative minds.

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Wedbush analyst Dan Ives commented that, within the technology sector, Tesla could stand to gain the most from a Trump administration. While Trump’s presidency might generally impact the EV industry negatively, potentially removing tax incentives and rebates that currently benefit EV buyers, Ives suggested that Tesla’s scale could actually turn this situation into a strategic advantage.

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According to Ives, Tesla’s unmatched reach in the EV market and its established production capabilities could position the company as a leading player even without government subsidies. Additionally, he noted that potential tariff increases on Chinese imports could protect Tesla from lower-cost EV competitors, as these tariffs would make it harder for inexpensive Chinese EVs to enter the U.S. market.

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Beyond vehicle sales, Ives highlighted how Tesla’s software ambitions might see a boost under Trump’s leadership. Tesla has been working to develop and gain approval for its autonomous driving technologies, and a Trump administration might offer regulatory support to speed up this process.

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Ives predicted that a Trump-led administration could add $40 to $50 per share to Tesla’s valuation if regulatory clearance for Tesla’s full-self-driving (FSD) technology accelerates in 2025. The company’s planned Cybercab robotaxi, part of Tesla’s broader autonomous vision, could also see benefits under a supportive administration.

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Musk’s influence in the government could expand further under Trump, who previously expressed interest in forming a government-efficiency commission led by Musk. In September, Trump noted that he wanted Musk to spearhead efforts to streamline government operations, a concept that Musk himself had originally proposed. However, if Musk takes on this new role, questions arise about how it might affect his involvement at Tesla, as additional government responsibilities could impact the time and energy he dedicates to the EV company.

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Overall, while Trump’s administration may signal challenges for the broader EV industry due to the potential rollback of subsidies, Tesla’s unique position and Musk’s close ties to Trump suggest that the company could benefit. Investors are betting on this scenario, as reflected in Tesla’s premarket rally.

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