For fans of Elon Musk, it’s a staggering half a trillion-dollar wager. This is the amount by which Tesla’s stock market value has soared since the presidential election, continuing its rapid ascent in recent days despite a lackluster financial report that would have typically caused other companies’ stocks to plummet. Investors are betting that President Donald Trump will ultimately benefit Musk’s company more than harm it, thanks to his plans to significantly reduce Washington regulations and impose tariffs to negotiate with key trading partners.
Less regulation? Great news. Trade war? Not a concern.
“It’s going to be a golden age for Tesla and Musk,” stated Dan Ives, a financial analyst at Wedbush Securities, who noted after an investor conference call on Wednesday, “This is the most optimistic I’ve ever heard Musk.”
Investing in Tesla has always been a gamble. The odds were stacked against Musk when he set out to create a successful electric car company, let alone grow it into the world’s most valuable automaker, making him the richest man in the process. However, this latest gamble appears particularly precarious.
Musk believes the company’s true value lies in a future filled with Tesla robots—potentially thousands by the end of the year—and in fully autonomous, driverless vehicles. During Tesla’s investor conference call, he promised to begin offering robotaxis in Austin, Texas, by June and expand nationwide by the end of next year.
The narrative suggests that Trump will accelerate this progress, having given Musk an office in the White House and appointed him head of the new Department of Government Efficiency, which aims to reduce the size of government.
Trump’s new transportation secretary, Sean Duffy, who could significantly influence Tesla, has largely adhered to the administration’s agenda. He has pledged to eliminate excessive regulations on automakers and to establish a unified set of federal rules for self-driving technology, replacing the inconsistent state regulations that Musk has criticized for hindering development.
Perhaps more crucially, Trump has softened his approach toward China, a vital market for Tesla, imposing an additional 10% tariff starting Saturday instead of the 60% he threatened during his campaign. However, Trump’s decision to impose tariffs on Canada, Mexico, and China caused Tesla’s stock to drop 6% in afternoon trading on Monday, mirroring the trend among other automakers. Chief Financial Officer Vaibhav Taneja indicated last week that the company would feel the impact of these tariffs, as it sources parts globally.
Trump has also proposed measures that could negatively affect Musk’s business. He aims to eliminate a $7,500 federal tax rebate intended to encourage electric vehicle purchases and plans to relax emission standards, which could undermine Tesla’s business model of selling “regulatory credits” to automakers that exceed pollution limits. Tesla generated $692 million from these credits.
