(Bloomberg) -- Tesla Inc. shares surged as investors wagered Donald Trump’s return to the White House will benefit Elon Musk’s company — even as the rest of the electric-vehicle market faces an increasingly cloudy outlook.
The carmaker’s chief executive officer was arguably the most prominent supporter of Republicans this election cycle, backing them with more than $130 million in spending and relentless messaging on X, his social media network. While Trump criticized EVs throughout his campaign, he softened his tone somewhat after Musk’s endorsement.
“Let me tell you, we have a new star, a star is born: Elon,” Trump said during an address to supporters at his election watch party in West Palm Beach, Florida. He spoke about Musk for almost four minutes, praising his company SpaceX and calling him a “special guy” and “super genius.”
Tesla shares jumped as much as 15% Wednesday to $289.59, their highest intraday since July 2023. That stood in marked contrast to other EV makers, with Rivian Automotive Inc. tumbling 10% and Lucid Group Inc. falling 8%. European automakers also slumped over concern about Trump’s threats to hike tariffs on imported cars.
“The biggest positive from a Trump win would be for Tesla and Musk,” Daniel Ives, a Wedbush Securities analyst, wrote in a report to clients. Tesla would be at a competitive advantage over other manufacturers in the event the US reduces tax incentives for electric vehicles, he said.
Trump’s opponent, Vice President Kamala Harris, likely would have maintained policies supporting US production and sales of EVs, including the Inflation Reduction Act that President Joe Biden signed into law two years ago. But Musk had already soured on Biden before then, in large part due to the Democrat’s embrace of unions and failure to credit Tesla for leading the EV transition.
Multiple EV-related provisions could now be targets for repeal — especially if Republicans take both houses of Congress, BloombergNEF analysts warned last week.
Fuel-economy and emissions requirements are also likely to undergo rewrites, as they did during Trump’s first term, which could limit the revenue Tesla generates from selling regulatory credits to manufacturers struggling to comply with Biden’s tougher rules.
Regulatory Relief
Musk has downplayed the threat of any pullback in government incentives for EVs while emphasizing the potential for companies to benefit from deregulation.
During Tesla’s quarterly earnings call last month, he called for a federal approval process for autonomous vehicles and said he would “try to make that happen” if tapped for a role in Trump’s administration.
Under current regulations, automakers must get permission from the National Highway Traffic Safety Administration before putting cars on the road that lack a steering wheel or other controls required by US auto-safety standards. If Tesla were to secure such an exemption, it could only put a few thousand such cars on the road per year.
“The autonomous fast-tracking will be front and center for investors,” Wedbush’s Ives wrote, speculating that Tesla may be able to accelerate plans to put self-driving vehicles on the road.
--With assistance from Subrat Patnaik.
(Updates to add industry context beginning in the first paragraph.)
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