Elon Musk’s embrace of President-elect Donald Trump is paying off for Tesla shareholders. The company’s stock jumped nearly 15% on Wednesday after Trump’s election victory. However, investors are questioning what the relationship between Musk and Trump will mean for them in the coming years.
Trump has been closely tied to Musk, who has backed the president-elect with substantial financial commitments. Musk recently added donations totaling $43.6 million to America PAC, his GOP super-PAC, in early October. His total known political spend this year now exceeds $132 million.
In response, Trump has promised Musk a position in his administration, suggesting he could help boost government efficiency. However, their relationship hasn’t always been smooth. In 2022, Trump disparaged Musk on Truth Social, criticizing his reliance on subsidies.
Despite past tensions, Musk’s endorsement of Trump after a near assassination attempt in July has solidified their relationship. Musk wrote on X shortly after the shooting, “I fully endorse President Trump and hope for his rapid recovery.”
While Musk is in charge of companies like SpaceX and X, Tesla investors have the most at stake from his ties to Trump.
Trump ties impact Tesla’s future
The president-elect has criticized EVs in the past, promising to reverse Biden’s EV policies if re-elected. The Inflation Reduction Act introduced a $7,500 EV tax credit, which could be threatened under Trump’s administration. Analysts have mixed views on how Trump’s return to the White House could affect Tesla.
Some believe Trump’s policies might roll back emissions requirements and federal EV tax credits, impacting EV companies. However, Tesla’s competitive advantages might allow it to thrive even without subsidies. Dan Ives from Wedbush suggests Tesla could gain a significant market edge if subsidies were removed and tariffs on cheaper Chinese EVs were increased.
He estimates that a Trump win could add $40-$50 per share to Tesla’s stock value. Tesla’s robotaxi ambitions could also benefit from a Trump administration. Regulatory approval for Tesla’s autonomous driving technology might be expedited, potentially bringing Tesla’s Cybercab robotaxis to the streets sooner than anticipated.
Given Tesla’s advancements and competitive positioning, some analysts believe Trump’s support could propel the company to new heights. Tesla plans to continue robotaxi testing in 2025, with a potential rollout as early as 2026. With Trump and new regulators in place, this timeline could accelerate.
