Tesla's Stock Surge Amid Trump Administration Policies

Despite concerns regarding the impact of the new Trump administration on electric vehicles (EVs), Tesla's stock has risen 28% since the election, according to a memo from Bernstein.

In the note, Bernstein analyzed the underlying factors contributing to this increase and considered how Elon Musk and Tesla might benefit from the administration's initiatives.

While there are potential challenges, including the likelihood of ending consumer and battery manufacturing tax credits under the Inflation Reduction Act, loosening emissions standards, and possible tariffs on Chinese batteries, Bernstein points out some positive aspects.

> “As Trump stated, ‘I’m for electric cars. I have to be because, you know, Elon endorsed me very strongly.’ Musk is also the co-lead of the new Department of Governmental Efficiency.”

Bernstein suggests that one of the significant advantages for Tesla could be the acceleration of its Full Self-Driving (FSD) technology. They highlight that favorable legislative changes and supportive appointments within the National Highway Traffic Safety Administration (NHTSA) might expedite the testing timelines for Tesla’s autonomous driving goals.

However, they caution that the success of these advancements depends on the effectiveness of the technology. “If it doesn’t work, consumers and states will push back on or ban the technology,” they noted. They also pointed out that self-certification could lead to substantial liability risks for Tesla.

Other potential benefits include production subsidies based on volume, favorable tariff treatment, or even government fleet purchases of Tesla vehicles, which could provide a “4% volume tailwind.”

Additionally, Bernstein mentioned that the Trump administration's strategies might also support Musk’s other ventures, such as SpaceX, Starlink, Neuralink, and xAI.

Nevertheless, Bernstein remains cautious overall regarding Tesla, maintaining an Underperform rating on the stock with a $120 price target. They emphasized that both regulatory changes and advancements in autonomy still face significant challenges.