Tesla’s stock (TSLA) soared by as much as 15%, but it settled down by about 11% at the time of writing on the Trump victory as Tesla shareholders believe CEO Elon Musk would get things out of backing the President.
But what?
I have been curious about how Tesla’s stock would react to the election as the Democrats have been really good to Tesla through the new EV tax credit and IRA, which is giving Tesla billions in incentives for batteries and charging stations.
And on the other hand, Tesla’s CEO Elon Musk invested over $100 million in getting Trump elected despite the fact that he repeatedly said he doesn’t believe in electric vehicles and he wants to remove all those incentives.
Fundamentally, for Tesla’s business, the Democrats appear better, but I suspected that Tesla shareholders would follow Musk in seeing Trump as a better signal, considering how strongly he backed him.
Sure enough, Tesla (TSLA) is up 11% today on the news of Trump’s election:
What can Trump do for Tesla?
Of course, there’s the theory that Musk is backing Trump to get help out of his pickles with the SEC, DOJ, Labor Board, and more government agencies who have been investigating him over his tendency to flirt a dangerous line with laws and regulations.
While this can affect Tesla, it mainly affects Musk’s ownership of Tesla or his role at the company, which is something that shareholders have made clear that they value. That might explain some of the positive sentiments about the stock today.
In terms of actual policies that would be beneficial to Tesla, you have to dig a bit deeper to understand a potential positive outlook.
Musk has admitted that removing incentives will hurt EV sales, but he believes that Tesla’s cost structure would be better suited to survive the slowdown, which should shake off some of the competition. That’s a potential avenue that could be positive for Tesla’s stock, albeit negative for Tesla’s original mission, which was to accelerate the entire auto industry toward electrification.
The only thing that Musk clearly stated that he would try to push that could potentially help Tesla is a federal pathway to approve a self-driving system, but even that would require Tesla to have a working self-driving system.
Top comment by EhCanadian
Answer: Crypto and Libertarianism.
Before Tesla, Musk was Peter Thiel's right hand man in his alt-financial schemes - the precursor to modern crypto - and Musk remains an important figurehead among Crytobro cultists. Crypto lobbyists have poured tens of millions into Trump's campaign, and the campaigns of key senators.
Crypto itself is part of a larger Libertarian ideology, which both Musk and Thiel subscribe. Thiel has backed multiple sea-steading schemes to create a soveriegn business center outside the juristication of any government's laws and regulations. Musk has envisioned a Mars Colony with similar Libertarian ideals. But why go to the trouble of building a colony at sea or in space when "Project 2025" brings much of Thiel and Musk's ideology to the United States?
The company claims it will happen by Q2 2025, but it claimed it will happen every year for the last 5 years.
Electrek’s Take
My main issue with this and why I sold my Tesla stocks is that it goes against the mission. Tesla’s mission was to accelerate the world’s transition to electric transport and renewable energy – not to take advantage of government incentives, lobby the government/get Trump elected to remove the incentives and gate-keep the competition so it could retain higher market shares.
That’s not something I can ethically be a part of.
That said, I wish Trump the best since if he actually does well, it means that the US will do well. I just have my doubts for obvious reasons.
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