Another term for former President Donald Trump could be a good thing for Tesla despite Trump’s repeated sharp criticism of electric vehicles and government incentives for Americans to switch from gas cars, one notable analyst said Thursday, posing another potential tailwind for the Elon Musk-led carmaker’s sizzling stock.
Elon Musk, center, and Donald Trump, right, at the White House in 2017.
Another Trump presidency would be an “overall negative for the EV industry” remarked Wedbush analyst Dan Ives in a Thursday note to clients, citing the “likely” event that his administration would ax the $7,500 federal tax credit for new EV purchases, which Trump has reportedly told donors he intends to do.
But a Trump win could still be a “potential positive” for Tesla, according to Ives, a confounding proposition considering Tesla sold 50% of all electric cars in the U.S. during 2024’s second quarter and the U.S. accounted for 47% of the company’s 2023 revenues.
Ives explained that Tesla could have a “clear competitive advantage” if the government incentives are no more, indicating Tesla can regain market share in the increasingly competitive EV space.
Trump’s insistence on instituting tariffs on Chinese imports “would continue to push away” Tesla’s Chinese competitors NIO and BYD, the latter of which overtook Tesla as the world’s most prolific EV hawker earlier this year, Ives added.
Trump tariffs would be “beneficial” to Tesla, concurred Ambienta hedge fund manager Fabio Pecce to Bloomberg, declaring, “if Trump wins, it is truly going to be very positive” for Tesla.
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Though he has said at times he's a “big fan” of electric vehicles, Trump has more often criticized electric vehicles as a broad concept. Trump said at a rally last month “don’t bother with the electric” and claimed in a March interview that the cars “cost too much” and they are “all going to be made in China.” Yet Musk, the chief executive and largest shareholder of Tesla, and Trump have formed an unlikely alliance. Musk said at Tesla’s annual shareholder meeting last month Trump told him he’s a “huge fan” of his company’s new Cybertruck model in one of their “out of the blue” phone conversations. The Wall Street Journal reported in May that the two have discussed an advisor role for Musk in a Trump Administration, though Musk later denied any such talks took place. Musk is by far the richest person on the planet, as his $251 billion net worth is $40 billion more than anybody else’s, according to Forbes’ estimates.
Tesla stock was on track Thursday to suffer its worst day since March 4, with shares down more than 7%, reversing what was a 3% gain in early morning trading. It would be Tesla’s first losing day on Wall Street since June 24, breaking an 11-session streak of gains. Shares of Tesla are still up more than 40% over the last month.
Inside Donald Trump and Elon Musk’s Growing Alliance (Wall Street Journal)
Hedge Funds That Piled Into Big Tesla Short Stung by Rally (Bloomberg)