If Donald Trump secures a return to the White House, his policies could bring mixed outcomes for Tesla and its CEO, Elon Musk.
While a Trump presidency might provide Musk with favourable conditions to advance certain initiatives, experts warn it could also unsettle Tesla’s consumer base and market stability.
Musk, a vocal Trump supporter, could see some policies work to his advantage, yet the broader electric vehicle (EV) sector may face challenges under Trump’s administration.
Tesla’s advantage in a Trump-led economy
A primary concern for the EV industry under Trump’s leadership is the potential elimination of federal EV subsidies and tax incentives.
Trump has historically supported the fossil fuel industry and criticised green energy policies, suggesting his approach would likely be less supportive of EV growth compared to the Biden administration.
Tesla’s expansive scale in the EV market could give it a unique edge over smaller US competitors if federal support dwindles.
According to a report by Investing.com, analysts at Wedbush suggest that Tesla’s market dominance and unmatched production capabilities could allow it to weather a less EV-friendly economic environment better than most.
By reducing or removing subsidies, Tesla could benefit from a reduction in market competition.
Domestic players lacking Tesla’s production capabilities would face steeper challenges in maintaining competitiveness without these incentives, potentially narrowing the field in favour of Musk’s company.
Trade policies and Tesla’s position against Chinese EV manufacturers
Another aspect likely to favour Tesla under a Trump administration would be stricter trade policies, particularly tariffs targeting Chinese goods.
Trump has previously imposed significant tariffs on Chinese imports, and analysts predict he may intensify these measures if re-elected.
Chinese EV manufacturers like BYD and Nio, known for producing affordable electric cars, may find it harder to penetrate the US market under Trump’s tariffs.
This protectionist stance could allow Tesla to maintain a stronger hold on the American market without the influx of low-cost EV imports from China, thereby boosting Tesla’s sales opportunities domestically.
Support for Musk’s autonomous driving ventures amid regulatory changes
Musk’s interest in autonomous vehicles could gain momentum with Trump’s support for deregulation.
Analysts speculate that Trump’s approach to technology and business deregulation may expedite Musk’s ambitious goals in autonomous driving.
The introduction of Tesla’s anticipated “Cybercab” robotaxi, for instance, could be fast-tracked under a Trump administration that is less stringent about the regulatory red tape surrounding self-driving technology.
While full production of the Cybercab is not anticipated until at least 2027, a friendlier regulatory landscape could accelerate its development timeline, giving Tesla a potential advantage in the autonomous vehicle sector.
Potential backlash from US consumers amid political polarisation
Despite these favourable prospects, a Trump-backed Tesla could face significant backlash from American consumers.
Tesla’s brand has historically aligned with environmentally conscious buyers, and Musk’s association with Trump could alienate parts of this demographic.
Wedbush analysts warn that Musk’s vocal support for Trump could influence consumer sentiment, potentially driving some environmentally focused customers away from Tesla.
While this impact may be gradual, it could create long-term challenges for Tesla’s brand, particularly if eco-conscious buyers view Tesla as politically aligned with policies that don’t support the broader green agenda.
Market volatility and Tesla’s valuation amid election uncertainties
Trump’s polarising stance on green energy and climate change has the potential to inject more volatility into the EV market, particularly for Tesla investors.
As the stock market reacts to political shifts, Tesla’s valuation could see significant swings depending on investor sentiment and expectations about EV incentives.
Analysts advise investors to be cautious, highlighting that a Trump victory could lead to uncertainty for Tesla’s future earnings, even with potential support for Musk’s business initiatives.
Assessing Tesla’s stock prospects in a Trump-led administration
With Trump’s potential return to office, investors face complex questions about Tesla’s stock value.
The mix of potential deregulation, trade protections, and weakened competition may provide Tesla with certain advantages, yet concerns over consumer sentiment and market volatility complicate the outlook.
While Tesla’s long-term potential remains robust, a Trump 2024 win presents a double-edged sword for Musk, bringing both opportunities and risks to Tesla’s future in the ever-evolving EV market.
