Elon Musk’s embrace of President-elect Donald Trump is showing immediate benefits for Tesla shareholders. The company’s stock rose nearly 15% on Wednesday as investors ponder the long-term implications of Musk’s relationship with Trump. Trump, who was victorious on Election Day, appears to be closely aligned with Musk.
Musk recently made donations totaling $43.6 million to America PAC, his GOP super-PAC, bringing his total political contributions to over $132 million this year. In return, Trump has suggested that Musk might have a role in his administration, aiming to boost government efficiency. However, their relationship has not always been amicable.
In 2022, Trump criticized Musk on Truth Social, claiming Musk’s companies would be “worthless” without government subsidies. This came after Musk had openly remarked that Trump was too old to run for president again. Despite their rocky past, Musk’s commitment to free speech, deregulation, and anti-woke policies has brought him closer to Trump and the GOP.
After a near-assassination attempt on Trump in July, Musk openly endorsed him, solidifying their alliance. As the CEO of Tesla, SpaceX, and owner of X (formerly Twitter), Musk’s strengthened ties with Trump have significant implications, particularly for Tesla.
Trump alliance impacts Tesla aspirations
Trump has been a vocal critic of the Biden administration’s push for electric vehicles (EVs), promising to reverse key policies like the Inflation Reduction Act, which includes a $7,500 EV tax credit. While this could threaten the EV industry, analysts believe Tesla’s competitive edge might actually benefit without federal subsidies. Analyst Karl Brauer from iSeeCars mentions that a Trump-led administration would likely reassess stringent EPA emissions requirements and federal EV tax credits, which could challenge EV companies, except potentially benefiting Tesla.
Wedbush’s Dan Ives also suggests that a Trump win could add significant value to Tesla’s stock, predicting the company’s market cap could exceed $1 trillion if advancements in autonomous driving accelerate. Tesla’s ambitions in robotaxi technology could be propelled forward under a Trump administration. CFRA’s Garrett Nelson highlights that Trump’s victory might expedite regulatory approval for autonomous driving, boosting Tesla’s robotaxi initiatives.
Nelson has upgraded Tesla’s stock to “Buy,” increasing its price target considerably. Although Tesla lags behind competitors like Google’s Waymo and GM’s Cruise in autonomous driving, Musk’s vision requires finding the “next big thing” beyond traditional EVs. Analysts believe that Trump could be more supportive of these technologies than the previous administration.
Tesla sees continued robotaxi testing through 2025, with potential rollout as early as 2026. With Trump and new regulators in place, Tesla’s Cybercab robotaxis might hit the streets sooner than expected, signaling a transformative era for the company and its stakeholders.
