The markets which caused Tesla to rise by 15% this Wednesday consider that the policy of the future American president will protect the manufacturer from competition and that deregulation will serve all of Elon Musk's interests.
This is what you could call a good day for Elon Musk. This Wednesday, the boss of Tesla saw his candidate Donald Trump easily win the American presidential election. On a more personal level, the richest man in the world has further increased his lead over his pursuers since the valuation of all of his holdings increased by $26.5 billion this Wednesday.
With a heritage which is now estimated at 290 billion dollars per Bloombergthe businessman surpasses Jeff Bezos by more than 60 billion (228 billion) and Mark Zuckerberg by 88 billion (202 billion).
During the session this Wednesday, Tesla's share price jumped nearly 15%, propelling Elon Musk's assets close to its historic record of November 2021 ($338 billion).
Evil tongues will say that betting on Donald Trump was one of the businessman's most profitable investments. According to federal documents, Elon Musk contributed at least $119 million to the candidate's campaign through donations to the Republican's support groups. In Wednesday's session alone, he won the bet 222 times.
Tesla is too far ahead in electric
If the political proximity of the business leader to the American president can explain this surge in the stock market, the economic logic is not obvious at first glance. Donald Trump being a pro-oil candidate when Elon Musk made his fortune in electric vehicles.
However, the market does not only welcome the political victory but also the very favorable financial outlook for Tesla according to them. If analysts believe that the Trump presidency will be unfavorable for electric vehicles as a whole, this will not be the case for Tesla.
“Tesla has unmatched scale and reach in the electric vehicle industry and this dynamic could give Musk and Tesla a clear competitive advantage in a subsidy-free environment for electric vehicles, coupled with likely higher Chinese tariffs that would continue to push back Chinese players from cheaper electric vehicles (BYD, Nio, etc.) to flood the American market in the years to come,” continues Dan Ives, analyst at Wedbush.
In other words, Tesla would have such a lead on electric vehicles that the reduction in subsidies would only harm the historic automobile companies which are trying to electrify their fleet, namely General Motors, Ford and other Stellantis.
Furthermore, the increase in customs duties envisaged by the Republican on European and Chinese imports would protect Tesla by improving the competitiveness of the American manufacturer.
More generally, all of the businessman's activities could benefit from the future presidency. Elon Musk's business interests depend greatly on government regulations, subsidies, or policies.
Whether it is SpaceX rockets which depend on state order, autonomous vehicles and Neuralink implants subject to significant regulations… The businessman could direct federal decisions in his favor due to his proximity to the new administration.
“Elon Musk sees all regulations as hindering his business and innovation, a former senior SpaceX executive was quoted as saying by Reuters. He sees the Trump administration as a way to get rid of as many regulations as possible, so that he can do whatever he wants, as quickly as he wants.”
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