Teslaβs stock surged on Wednesday as investors anticipated benefits for the electric vehicle maker and its CEO, Elon Musk, under Donald Trumpβs presidency. Tesla is poised for significant gains due to reduced subsidies for alternative energy and electric vehicles, which would disproportionately harm smaller competitors.
Trumpβs planned tariffs on Chinese imports make bulk sales of Chinese EVs in the US unlikely. Consequently, Tesla shares jumped over 14% on Wednesday, while rival electric vehicle makersβ shares declined. Nio fell 5%, Rivian dropped 9%, and Lucid Group decreased almost 8%.
βTesla has the scale and scope that is unmatched,β said Wedbush analyst Dan Ives, in a note to investors. βThis dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.β
According to the Energy Information Administration, Tesla dominates the US electric vehicle market with a 48.9% market share as of mid-2024. The Inflation Reduction Act, signed into law by President Joe Biden in 2022, includes tax credits for clean energy manufacturing and consumption.
Elon Musk was a significant donor to Trumpβs campaign, spending at least $119 million to mobilize support. Teslaβs sales and profit declined in the first half of the year but rebounded with a 17.3% profit increase in the third quarter.
The US is investigating Teslaβs βFull Self-Drivingβ system following reports of crashes in low-visibility conditions. Investors initially reacted negatively to Teslaβs robotaxi unveiling but have since shown optimism. Tesla began selling βFull Self-Drivingβ software nine years ago, despite ongoing reliability concerns. The companyβs stock now shows a 16% gain for the year, following two days of growth.
Source: https://apnews.com
