Tesla’s stock has seen a remarkable week of gains, surging around 20% over the past five days, and around 52% over the past year. Tesla’s market capitalisation passed US$1 trillion for the first time in two years on Friday.
However, there are some signs of caution. As of the time of writing, shares are around 4.16% lower at US$335.43.
Investors are responding to Tesla CEO Elon Musk's close association with President-elect Donald Trump, anticipating a beneficial environment for the automaker under the new administration. Federal records indicating Musk has contributed at least US$119m to pro-Trump initiatives.
A notable element of Musk’s relationship with Trump is his reported appointment to a proposed government efficiency commission, which aims to simplify federal processes and reduce bureaucratic barriers. Analysts have suggested that this alignment could yield benefits for Tesla, particularly as the company advances its autonomous driving and robotaxi ambitions, areas where regulatory clarity and support are critical.
Tesla’s focus on autonomous driving technology has been a strategic priority as the company looks to integrate self-driving capabilities across its vehicle line-up.
Tesla’s other ventures, including SpaceX, Starlink, and Neuralink, similarly rely on federal approvals, grants, and favourable policies.
Despite these developments, Musk’s influence could be met with scrutiny, with some legal experts suggesting that Tesla’s favourability in policy could lead to potential accusations of preferential treatment. However, any legal challenges would take years to develop, allowing Tesla time to capitalise on any near-term regulatory advantages.
Tesla’s positioning in the electric vehicle market remains strong even as Trump has signalled a potential rollback of EV incentives introduced by the Biden administration. Analysts predict that Tesla’s established market presence may allow it to withstand such policy shifts, which could impact smaller startups more significantly.
