Tesla Stock Reacts to Donald Trump Presidency

Key Takeaways

• U.S. stock markets rallied overnight as Donald Trump’s victory became apparent.
• One of the biggest winners was Tesla.
• While Trump’s policies could deliver mixed results for Tesla, its stock price reflects the prospect of Elon Musk joining the new government.

Wall Street has responded positively to Donald Trump’s election victory, with major indices up over a percent in overnight trading.

Of course, some stocks have fared better than others, with Tesla being one of the biggest winners following the election results.

Tesla Stock Surges

As vote counts started to come in overnight, Tesla stock  surged 9% to a high of nearly $265 per share in post-market trading. And while it has fallen since that initial spike, TSLA will open with a bullish wind behind it on Wednesday.

For Tesla, the stock market rally could be attributed to one crucial factor—Elon Musk and his expected role in the new government.

Elon Musk’s Government Role

While Trump hasn’t confirmed the specifics, he has hinted that Musk could be appointed to curb government spending.

Musk has expressed interest in starting a new Department of Government Efficiency, fueling the speculation.

With a likely role in the new government and, after throwing his weight behind the Trump campaign, a good personal relationship with the next president, the potential benefits for Musk and his companies are wide-ranging.

With Musk about to attain more influence in Washington than ever before, a favorable regulatory and tax environment could be a significant boon for Tesla.

How Will a Trump Presidency Affect Tesla?

Although Wall Street has judged that a Trump presidency would benefit Tesla, the specific implications of certain policies are less clear.

For example, Trump has vowed to rescind unspent funds from the Inflation Reduction Act, which provides subsidies for electric vehicles.

Another major factor at play is Trump’s proposed tariffs on imported goods.

On the one hand, Tesla has benefited from a restrictive import regime that has kept competition from Chinese EV manufacturers at bay. With his hawkish stance on China, Trump will likely extend existing tariffs and restrictions.

On the other hand, Tesla’s production costs could rise and plans for a new factory in Mexico may face challenges if new tariffs on Mexican imports are implemented.