Shares of Tesla surged on Wednesday following the re-election of Donald Trump, a result that was strongly supported by CEO Elon Musk. The prospect of reduced subsidies for alternative energy and electric vehicles under a Trump administration is expected to benefit Tesla, which currently holds a dominant market share of 48.9% in the U.S. electric vehicle market.
Following the election outcome, Tesla's stock price jumped by 13%, while shares of rival electric vehicle manufacturers experienced declines. Trump's proposed tariffs on foreign goods, particularly impacting EV makers outside the U.S., led to further market reactions with Chinese EV companies also witnessing a drop in U.S. markets.
Analysts believe that Tesla's scale and scope provide a competitive advantage in a subsidy-free environment, potentially pushing away cheaper Chinese EV players. The Inflation Reduction Act, signed by President Joe Biden in 2022, includes tax credits for manufacturing and consumers of electric vehicles, supporting the clean energy sector.
Despite the positive market response, Tesla faced challenges throughout the year, including declining sales and profits in the first half of 2024. However, profit did see a 17.3% increase in the third quarter. The company also came under scrutiny for its “Full Self-Driving” system, with reports of crashes in low-visibility conditions leading to a federal investigation covering approximately 2.4 million Teslas from 2016 to 2024.
Investor confidence wavered when Tesla unveiled its robotaxi at a Hollywood studio, revealing limited progress in autonomous vehicles compared to other industry players. The software, named “Full Self-Driving,” has been sold by Tesla for nine years, but concerns about its reliability persist.
