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- Tesla shares jumped almost 13% on Wednesday morning following Donald Trump's election victory.
- Elon Musk has been outspoken supporter of Trump, spending months campaigning for him.
- Analysts' optimism about Tesla's outlook has grown following Musk's major Trump endorsement.
Elon Musk's big bet on Donald Trump is already paying off for Tesla.
The EV company's stock surged nearly 13% on Wednesday morning following the election result, with Wedbush Securities analyst Dan Ives calling Trump's victory a "homerun for Tesla."
"Elon Musk's status as Trump's ally from the business community hasn't gone unnoticed by investors who have bid up shares in Tesla by 3% in pre-market trading on the election news," he said.
Musk has been an outspoken supporter of Trump during the election. The billionaire has spent the last few months campaigning for the president-elect, even joining him onstage at a political even in Butler, Pennsylvania.
Gene Munster, the managing partner at Deepwater Asset Management, said Tesla's stock surge was based on an emotional response from investors and their confidence in the EV company's CEO.
"That emotion is Elon made a big bet and was right. This gives investors confidence that his next big bet has a greater potential to succeed," Munster said in a post on X on Wednesday.
In his victory speech early Wednesday, Trump praised Musk's efforts, calling him a "super genius" and "a new star." The president-elect has also suggested a government role for Musk in his new administration.
Boost for Tesla's robotaxis
Garrett Nelson, VP and senior equity analyst at CFRA Research, said Trump's victory could be a boost for Tesla's autonomous driving technology.
"In our view, TESLA and CEO Elon Musk are perhaps the biggest winners from the election result," he said in a statement on Wednesday. "We believe Trump's victory will speed up regulatory approval of the company's autonomous driving technology."
Tesla's Autopilot has faced regulatory scrutiny for years, with recalls and safety concerns from regulators. The company's robotaxi is likely to face similar regulatory and security challenges before it gets to market.
However, Musk's working relationship with Trump could improve the chance of the federal government moving faster to approve Tesla's autonomous driving plans, Munster said.
In a post on X, he said the odds of Tesla;s "autonomy plan working went up this morning."
"This is important given the regulator side of autonomy is more difficult to move forward than the tech side. Elon still has to deal with the States," he added.
(The quote emphasizing that regulatory process is a critical factor in the successful of autonomous systems.)
Trump win an 'overall negative' for EV industry
Despite the surge in Tesla shares, Trump's victory could be bad news for the wider EV market.
Ives said the Trump presidency could be an "overall negative" for the EV industry, citing the possibility that the Trump administration could withdraw tax incentives and rebates for manufacturers.
However, these policies could strengthen Tesla's competitive advantage by making rival EV models even less economically viable, Nelson said. Musk and Tesla could benefit from the changes due to the company's scale and unique market position.
- homerun for Tesla: Trump's election victory is expected to create a highly favorable environment for Tesla's growth and success in the coming years.
- ally: someone who helps and supports you when other people are trying to oppose you.
- outspoken: (adj) expressing your opinions honestly and directly, even when doing this might annoy some people
- onstage: (adj) on the stage in a theatre.
- surge: (v) to suddenly move very quickly in a particular direction.
scrutiny: (n) careful and thorough examination of someone or something
withdraw: (v) o stop taking part in an activity, belonging to an organization etc, or to make someone do this
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