GCITesla & Trump: Could it backfire on Musk
Tesla’s market value breached the $1tn mark in a sharp rally after Donald Trump secured the White House. Traders are betting on favourable treatment for CEO Elon Musk’s companies in return for his support of Trump. Tesla might benefit from favourable regulation of autonomous vehicles. Musk could also push for the US National Highway Traffic Safety Administration to hold off on potential enforcement actions relating to Tesla’s current driver-assistance systems.
“Tesla and CEO Elon Musk are perhaps the biggest winners from the election result, and we believe Trump’s victory will help expedite regulatory approval of the company’s autonomous driving technology,” said Garrett Nelson, senior equity analyst at CFRA Research. However Trump policies on trade and the environment could actually make life harder for Tesla. Trump said he would increase tariffs on Chinese goods and roll back tax credits to EV buyers in the U.S. He’s also talked about eliminating many vehicle emissions standards under the Environmental Protection Agency, which support the EV industry. Musk could influence the rollout and impact of tariffs on Chinese goods – but analysts are split over whether this would be a positive for Tesla or not. The elimination of the $7,500 tax credit given to EV buyers in the United States, would hit Tesla’s wafer thin margins but would also make it more difficult for competitors to enter the market.
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