Tesla is rallying on Donald Trump's election win as the EV giant reclaimed a $1 trillion market capitalization on Nov. 8 and has now advanced around 25% in 2024. TSLA shares fell on Nov. 14 amid reports the president-elect's transition team plans to discontinue the $7,500 EV consumer tax credit.
TSLA stock dropped 5.8% to 311.18 during market trade Thursday after Reuters reported Trump's transition team wants to do away from the Inflation Reduction Act, IRA, EV tax credit. Chief Executive Elon Musk has already endorsed the idea of cutting the tax credit, echoing the belief that Tesla can thrive without it.
"This is NOT a surprise in any way as we fully expected Trump will rip away the EV tax credit once he gets into the oval office in January," Wedbush Securities analyst Dan Ives, a Tesla bull, wrote Thursday.
He added that "this is a clear negative for the EV industry," but that "we view this as a net bullish move for Tesla and Musk over time."
"We expect Musk to have a big seat at the table as these EV discussions happen within the Trump transition team," Ives added. "We believe any sell-off in Tesla from these reports is the wrong knee-jerk reaction and we would be buyers."
With Trump winning the White House, the top question for investors is: when is it a good time to buy or sell Tesla stock.
The Musk-Trump Alliance
The EV giant is on a 34% tear since President-elect Donald Trump defeated Vice President Kamala Harris in the Nov. 5 election. Analysts generally see the Trump presidency as an overall negative for EVs, but a positive for Tesla. Musk fostered a good relationship with the president-elect after campaigning tirelessly for him throughout the election cycle.
Late on Nov. 12, Trump announced in a statement that Musk and Vivek Ramaswamy will lead the Department of Government Efficiency (DOGE) to "dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures and restructure Federal Agencies."
Musk, in the statement, said, "This will send shockwaves through the system."
The Department of Government Efficiency is tasked with providing "advice and guidance from outside of Government and will partner with the White House and Office of Management & Budget."
Ives on Nov. 13 wrote that "while this is not an official U.S. government department and would not need Congressional approval, its clear that Musk will have a massive role in the Trump White House with his increasing reach clearly across many federal agencies."
"Since this is not an official cabinet or U.S. government position and it is essentially newly created, there will be NO changes to Musk's CEO roles with Tesla and SpaceX importantly from the Street's perspective," Ives added.
The analyst also recently hiked his price target on Tesla to 400, up from 300, based primarily on the belief that the "Trump White House win will be a gamechanger for the autonomous and AI story for Tesla and Musk over the coming years."
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Meanwhile, Adam Jonas, Morgan Stanley's high-profile auto analyst and a TSLA bull, wrote on Nov. 11 that the "investor perception" of Musk has "significantly evolved" over the past week.
"Elon Musk's public support for President-elect Trump has vaulted Tesla's CEO to be considered a powerful voice in the incoming administration," Jonas said.
Tesla: Third-Quarter Earnings
The EV giant's third-quarter earnings unexpectedly rose 9% in the third quarter, snapping a four-quarter string of year-over-year declines. Revenue came in slightly below forecasts. Gross margins jumped, fueled by strong Tesla Energy margins and a record-low cost of goods sold.
Regulatory credits were high at $739 million, though below Q2's $890 million. FSD revenue recognition also may have helped.
Tesla's CFO said the EV maker may not be able to sustain Q3's margins in Q4. Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025, Tesla reported Wednesday.
Notably, Tesla expects to report higher deliveries for the full year, which will require a big gain in Q4. Tesla has ramped up incentives in the past few days, with 0% financing and higher inventory discounts.
On the Tesla earnings conference call, Musk said he expects vehicle deliveries will rise 20%-30% in 2025. He also pegs Q2 2025 as the internal target for FSD unsupervised to be safer than a human driver.
Tesla said it's testing a ride-hailing services with employees, using a human safety driver. That hit shares of Uber and Lyft early Thursday.
However, Musk also conceded that Tesla EVs with Hardware 3.0 might not be able to achieve true self-driving. He said if that's the case, Tesla will upgrade FSD customers with HW3.0 for free.
Musk said that the upcoming "affordable" EV will cost less than $30,000, "with incentives." But if that assumes the $7,500 IRA tax credit, that suggests the list price will be below $37,500, but perhaps not much more.
Wall Street consensus also has 2024 Tesla earnings firmly below last year's level. That signals another year of earnings declines for this growth stock. Analysts currently expect Tesla earnings per share of just $2.42 in 2024, according to FactSet. That would be about a 22% decline vs. $3.12 in 2023.
Tesla Earnings Unexpectedly Rise 9% In Q3, Elon Musk Bullish
Read more on Tesla second-quarter earnings or on the company's first-quarter report.
Tesla Stock: The Robotaxi Event
Musk set sky-high expectations for the "We Robot" event. But after showing off a Cybercab and Robovan late on Oct. 10, the market seemed unimpressed with Musk as he once more claimed full autonomous driving will come "next year" but did not offer any details or updates of an "affordable" EV.
The event was high on theatrics with Musk riding the two-seat Cybercab, with butterfly doors and no steering wheel, briefly to the stage to give his remarks. Dancing Optimus robots were paraded out with the Tesla humanoids serving attendees drinks. However, the consensus among analysts was that while the event was high on pomp and circumstance, it underdelivered on details.
"That's it? Disappointing lack of detail," Jonas proclaimed in his investor note following the event. Wells Fargo analysts echoed that sentiment, writing that Tesla's robotaxi event was mostly "razzle-dazzle" with "little substance."
Jonas said he had been looking for on quantifiable data on the improvements to Tesla's Full Self-Driving, known as FSD. Jonas was also expecting strategy on the business for a supervised and unsupervised ride-sharing service.
"We were overall disappointed with the substance and detail of the presentation. As such, we anticipated TSLA to be under pressure following the event," Jonas added.
Tesla Robotaxi Event: Cybercab, Robovan Unveiled; Musk Sees Self-Driving 'Next Year'
What Investors Learned
Musk did say he expects the Cybercab price tag will be below $30,000, with production starting "before 2027."
Further, Musk expects "fully autonomous unsupervised FSD in California and Texas next year — that's with the Model 3 and Model Y."
However, Musk admitted, "I tend to be a little optimistic with time frames."
Musk has said for years that Tesla would achieve self-driving "this year" or "next year," while production targets often slip considerably. He also didn't offer new evidence that Tesla FSD was making progress toward actual self-driving.
The Tesla chief also showed off the latest Optimus robot. He expects that the cost could be $25,000-$30,000 when produced at scale.
Cathie Wood On The Robotaxi
Tesla stock sold off hard the day following the robotaxi event, sending a sell signal to investors. However, Cathie Wood and her Ark Invest ignored that and purchased nearly $3 million in TSLA shares.
Wood, who has long been super-bullish on Tesla's autonomy push and robotaxi aims, attended Tesla's robotaxi event on Thursday. On June 12, Ark Invest updated its Tesla stock price target to 2,600 by 2029, estimating that around 90% of Tesla's enterprise value and earnings will be attributed to the robotaxi business in 2029.
Wood's Ark Invest tends to purchase Tesla stock and other positions amid sell-offs or when they break below key moving averages.
Without a robotaxi network and business, Ark Invest says its TSLA price target would be around $350 per share, according to the report.
"We remain confident that the service will launch within the next five years," Ark Invest said.
Musk And Tesla Control
Tesla shareholders also voted this year in favor of giving Musk his 2018 $56 billion pay package and reincorporating the company in Texas, moving it from Delaware.
Prior to the vote, Musk hinted he felt he needed more TSLA shares and voting power before making Tesla a "leader in AI & robotics."
In January, Musk posted on X that he's "uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control." The chief executive added that he wants enough shares to be "influential but not so much that I can't be overturned."
Musk currently has a nearly 13% stake in Tesla. Prior to selling TSLA shares to purchase Twitter, now X, for $44 billion in late 2022, Musk owned around 22% of Tesla.
Elon Musk, Layoffs And Superchargers
With Musk focused on full self-driving and artificial intelligence, he has also been shaking up Tesla, letting top executives go and announcing layoffs, this year.
Musk decided to let two top executives go while also cutting the EV company's entire supercharger team, according to reports on April 30.
In late April, Musk dismissed Rebecca Tinucci, senior director of Tesla's supercharger efforts, and Daniel Ho, head of the new vehicles program. The Tesla CEO also reportedly cut teams under Tinucci and Ho along with laying off its public policy employees and the entire staff working on Tesla superchargers.
However, since then he appears to have since started hiring back employees.
Musk also decided in April to lay off more than 10% of Tesla's global workforce, an effort to prepare for the "next phase of growth." Drew Baglino, who served as senior vice president of powertrain and energy, and Rohan Patel, vice president of public policy and business development, both departed Tesla around the time of those cuts.
Meanwhile, reports emerged on Aug. 20, that Uber has hired Tinucci to oversee the company's shift to electric vehicles. Tinucci will start her new position on Sept. 16.
In October, U.S. robotaxi industry leader Waymo, a unit of Alphabet, hired Daniel Ho.
Tesla EVs In Regulators' Sights
The National Highway Traffic Safety Administration announced on Oct. 18 it has opened a preliminary investigation into Tesla's Full Self-Driving, or FSD, technology in more than 2 million vehicles amid reports of four collisions, including one fatal accident, that appear to involve the autonomous driving feature in reduced visibility conditions.
The regulators said the investigation will cover 2.4 million Tesla vehicles and will look at how FSD technology detects and responds to low visibility conditions.
In December 2024, Tesla performed an over-the-air software "recall" on more than 2 million vehicles after federal regulators determined Tesla's Autopilot system is prone to misuse after reviewing 1,000 accidents.
Is Tesla Stock A Buy?
The stock surged 9% to 350, hitting an intraday high of 358.64, on Nov. 11.
Last week, Tesla stock spiked 29% to 321.22, the biggest weekly gain since the week ended Jan. 27, 2023.
Heading into market trade on Nov. 11, Tesla stock had a $1.03 trillion valuation, topping the $1 trillion mark on Nov. 8 for the first time in two years. TSLA stock is now on the IBD Leaderboard watchlist.
On Nov. 6, Tesla stock gapped up above an alternate handle buy point of 273.54 but was quickly extended.
Bank of America analysts on Nov. 7 raised the firm's price target on Tesla to 350 from 265 and maintained a buy rating on the shares. The firm wrote Tesla may benefit from a shift to a federal regulation of autonomous vehicles and full self-driving, or FSD, nationwide.
Tesla stock ranks second in the 35-member IBD Auto Manufacturers industry group. The stock has an 87 Composite Rating out of a best-possible 99. Shares also have a 95 Relative Strength Rating and a 77 EPS Rating.
Almost single-handedly, Elon Musk has turned the auto industry on its head. He has essentially forced it to get aboard the electric-vehicle train. Tesla has been a monster stock over much of its history, especially during its stratospheric run from mid-2019 to late 2021.
Tesla stock has cleared the 20% profit from a recent 264.86 handle entry. It is also extended from an alternate handle buy point at 273.54. TSLA has yet to cool down from its big post-election boost.
Please follow Kit Norton on X @KitNorton for more coverage.
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