Tesla’s stock surged on Wednesday as investors anticipated benefits for the electric vehicle maker and its CEO, Elon Musk, under Donald Trump’s presidency. Tesla is poised for significant gains due to reduced subsidies for alternative energy and electric vehicles, which would disproportionately harm smaller competitors.
Trump’s 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 makers’ shares declined. Nio fell 5%, Rivian dropped 9%, and Lucid Group decreased almost 8%.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This 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.”
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 Trump’s campaign, spending at least $119 million to mobilize support. Tesla’s 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 Tesla’s “Full Self-Driving” system following reports of crashes in low-visibility conditions. Investors initially reacted negatively to Tesla’s robotaxi unveiling but have since shown optimism. Tesla began selling “Full Self-Driving” software nine years ago, despite ongoing reliability concerns. The company’s stock now shows a 16% gain for the year, following two days of growth.
Source: https://apnews.com
