TLDR:
- Tesla stock rose 14.8% after Trump’s election win, adding $119 billion in market value
- Other EV makers fell: Lucid (-5.3%), Polestar (-8.2%), Rivian (-8.3%)
- Musk spent $130 million supporting Trump’s campaign
- Tesla trades at 93.8 times forward earnings
- Tesla holds 48.9% U.S. EV market share through mid-2024
Tesla’s stock surged 14.8% following Donald Trump’s election victory, adding $119 billion in market value, while other electric vehicle manufacturers saw their shares decline sharply. The divergent market reaction highlights Tesla’s unique position in the EV industry and CEO Elon Musk’s political strategy.
The stock movement came despite Trump’s historically unfavorable stance toward electric vehicles. The president-elect has expressed intentions to eliminate EV tax credits and emission mandates that require automakers to produce battery-powered vehicles.
While these policies caused steep declines in other EV stocks – Lucid Group fell 5.3%, Polestar Automotive dropped 8.2%, and Rivian Automotive declined 8.3% – Tesla emerged as the exception. The company’s market value increase was second only to Nvidia on election day.
Musk’s support for Trump, including approximately $130 million in campaign contributions, appears to have played a role in Tesla’s market performance.
The election outcome potentially saved Tesla from a $66 billion market value loss had it followed the same decline as its competitors.
Tesla’s dominant market position provides additional protection against policy changes. The company controls 48.9% of U.S. EV sales through mid-2024, according to the U.S. Energy Information Administration. Analysts suggest Tesla has the scale to remain profitable without tax credits, unlike smaller competitors.
Trump’s victory speech included praise for Musk, calling him a “super-genius” and discussing potential government roles for the Tesla CEO. The two have reportedly discussed creating a Department of Government Efficiency, with Musk potentially taking a position in the administration.
However, Tesla’s valuation metrics have reached elevated levels. The stock now trades at 93.8 times forward earnings, its highest multiple since April 2022, when EV deliveries were growing at 40% annually. Current expectations show flat delivery growth for 2024.
Wedbush analyst Dan Ives, who maintains a $300 price target on Tesla, suggests the company could benefit from reduced competition as government incentives decrease. Bank of America analyst John Murphy raised his target to $350, the highest among major brokers.
The company faces ongoing challenges, including an investigation into its “Full Self-Driving” system following crash reports. The probe covers approximately 2.4 million Teslas from model years 2016 through 2024.
Tesla’s recent financial performance has been mixed. While profits declined in the first half of the year, third-quarter earnings showed a 17.3% increase. The company plans to launch a lower-priced model in early 2025.
Looking ahead, analysts suggest Tesla needs to demonstrate accelerated earnings growth to justify its current valuation. This could come through improved car sales, new AI revenue streams, or benefits from a potentially favorable regulatory environment.
Technical analysts note Tesla’s stock has broken above recent resistance levels. Some suggest the stock could reach $400 if it maintains support above $270, representing a potential 35% increase from current levels.
Trump’s proposed tariffs on Chinese imports could benefit Tesla by limiting competition from Chinese EV manufacturers in the U.S. market. This policy stance could help maintain Tesla’s market dominance.
The company expects to launch a fleet of AI-trained self-driving taxis in late 2025, potentially opening new revenue streams. However, recent demonstrations of Tesla’s autonomous technology have received mixed reactions from investors.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
