Musk’s bet on Trump is already paying off for Tesla

Tesla shares surged in premarket trading as investors signaled confidence in Elon Musk’s bet on Donald Trump.

Elon Musk’s big bet on Donald Trump is already paying off for Tesla.

The EV company’s stock surged nearly 13% on Wednesday morning following the election result, with Wedbush Securities analyst Dan Ives calling Trump’s victory a “homerun for Tesla.”

“Elon Musk’s status as Trump’s ally from the business community hasn’t gone unnoticed by investors who have bid up shares in Tesla by 3% in pre-market trading on the election news,” he said.

Musk has been an outspoken supporter of Trump during the election. The billionaire has spent the last few months campaigning for the president-elect, even joining him onstage at a campaign rally in Butler, Pennsylvania.

Gene Munster, the managing partner at Deepwater Asset Management, said Tesla’s stock surge was based on an emotional response from investors and their confidence in the EV company’s CEO.

“That emotion is Elon made a big bet and was right. This gives investors confidence that his next big bet has a greater potential to succeed,” Munster said in a post on X on Wednesday.

In his victory speech early Wednesday, Trump paid tribute to Musk’s efforts, calling him a “super genius” and a “new star.” The president-elect has also suggested a government role for Musk in his new administration.

Boost for Tesla’s robotaxis

Garrett Nelson, VP and senior equity analyst at CFRA Research, said Trump’s victory could be a boost for Tesla’s autonomous driving technology.

“In our view, TSLA and CEO Elon Musk are perhaps the biggest winners from the election result,” he said in a statement on Wednesday. “We believe Trump’s victory will help expedite regulatory approval of the company’s autonomous driving technology.”

Tesla’s Autopilot has faced regulatory scrutiny for years, with recalls and safety concerns from regulators. The company’s robotaxi is likely to face similar regulatory and safety hurdles before it gets to market.

However, Musk’s working relationship with Trump could improve the chance of the federal government moving faster to approve Tesla’s autonomous driving plans, Munster said.

In a post on X, he said the odds of Tesla’s “autonomy plan working went up this morning.”

“This is important given the regulator side of autonomy is more difficult to move forward than the tech side. Elon still has to deal with the States,” he added.

Trump win an ‘overall negative’ for EV industry

Despite the surge in Tesla shares, Trump’s victory could be bad news for the wider EV market.

Ives said the Trump presidency could be an “overall negative” for the EV industry, citing the possibility that the Trump administration could withdraw tax incentives and rebates for manufacturers.

However, these policies could widen Tesla’s moat by making competing EV models even more uneconomic, Nelson said. Musk and Tesla could benefit from the changes due to the company’s scale and unique market position.

Ives echoed the sentiment, writing in a note that “Tesla has the scale and scope that is unmatched in the EV industry and this dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment.”

He added that this could be “coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players,” such as China’s BYD from “flooding the U.S. market over the coming years.”

Tesla has been facing fierce competition in China, with rivals rolling out their own EVs at lower prices.

BYD has been Tesla’s main competitor in the region, taking the title of the world’s top seller of electric cars from Musk’s company at the beginning of the year.

Earlier this month, BYD scored another win when its quarterly revenues outstripped Tesla’s for the first time.

BYD recorded revenues of 201.1 billion yuan ($28.2 billion) in the three months to September 30, up 24% from the same quarter last year. Tesla posted sales of $25.2 billion over the same period.

Representatives for Tesla did not immediately respond to a request for comment from B-17, made outside normal working hours.