NEW YORK (AP) – Shares of Tesla soared as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles (EV) doing the most harm to smaller competitors.
“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.”
Tesla shares jumped 14.8 per cent on Wednesday while shares of rival EV makers tumbled. Nio, based in Shanghai, fell 5.3 per cent. Shares of electric truck maker Rivian dropped 8.3 per cent and Lucid Group fell 5.3 per cent.
Tesla dominates sales of EV in the United States (US), with 48.9 per cent in market share through the middle of 2024, according to the US Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least USD119 million mobilising Trump’s supporters to back the Republican nominee. He also pledged to give away USD1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3 per cent in the third quarter.
The US opened an investigation into the company’s ‘Full Self-Driving’ system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio yesterday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
Tesla began selling the software, which is called ‘Full Self-Driving’, nine years ago. But there are doubts about its reliability.
The stock is now showing a 16.1 per cent gain for the year after rising the past two days.
