Tesla stock is soaring as Elon Musk looks to benefit from Donald Trump's victory
Tesla (TSLA) stock has been skyrocketing since former President Donald Trump defeated Vice President Kamala Harris to become the next president of the United States.
The electric vehicle firm’s CEO, Elon Musk, has become a close ally of Trump’s over the past several months, even spending election night with him at Trump’s Mar-a-Lago resort in Florida. Musk, who also leads several other firms, is poised to have some level of role or influence in the upcoming Trump administration, which he will likely use to help benefit his company.
Tesla stock climbed as high as 15% in after-hours trading before paring back to an 11% increase after the market opened Wednesday morning. The stock is up 12% year-to-date. DOGE, Musk’s favorite cryptocurrency, was up by more than 18% before its gains slipped to a 12% increase.
Musk has agreed to lead what he and Trump call a Department of Government Efficiency (DOGE), a commission that would conduct a “complete financial and performance audit of the entire federal government” and recommend reforms. Musk has said he would cut “at least” $2 trillion from federal spending, which is likely a difficult task given that the federal government has spent $6.75 trillion in fiscal year 2024.
As part of that job, Musk said he would advocate for a national approach to regulating driverless vehicles — a key market for Tesla — and cut overregulation, which he has repeatedly criticized as holding his companies back. SpaceX, Neuralink, X, and Tesla are collectively the subject of at least 20 recent investigations or reviews.
But whatever his exact role will be in the administration remains unclear. Cantor Fitzgerald CEO Howard Lutnick, who is helping lead Trump’s transition team, said Musk would be working “adjacent” to the government and “writing software” to help the government cut back spending. That would likely allow Musk to continue leading his companies without divesting, as he would have to do if he took an official role.
While Trump’s victory is good for Tesla, it’s expected to be less friendly to other automakers with EV plans. He’s expected to freeze provisions of President Joe Biden’s Inflation Reduction Act of 2022, which provided $7,500 tax credits for American-made EVs. Musk has supported ending the tax credit, believing it would help Tesla sales while slamming rivals.
“We believe a Trump presidency would be an overall negative for the EV industry as likely the EV rebates/tax incentives get pulled, however for Tesla we see this as a huge positive,” Wedbush Securities analyst Dan Ives wrote in a note Wednesday morning.
Ives added that Trump’s victory could add between $40 to $50 per share to Tesla’s stock and exceed a $1 trillion market capitalization if his presidency allows Tesla to accelerate its autonomous vehicle plans.
Last month, Musk said that Tesla expects to begin offering rideshare services next year in at least two states, California and Texas, where he also plans to get regulatory approval for “fully autonomous unsupervised” Full Self-Driving (FSD). Tesla also aims to begin scaling production of its Cybercab robotaxis in 2026, with plans to eventually make between 2 million and 4 million units per year; that’s more units than Tesla currently sells EVs.