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Donald Trump’s staunch supporter Elon Musk, who was also present at his victory speech, may not witness major gains for his EV company Tesla. Here’s why
Why Trump presidency may not benefit Tesla. (Photo credit: PTI/ Reuters)
Washington: Tesla chief Elon Musk, who has been a staunch backer of Donald Trump for the US Presidency was acknowledged by Trump in his victory speech as a “star”. Trump called him “an amazing guy” for campaigning with him over the past 2 weeks. He said he loved Musk for doing this. Musk is reportedly likely to be named as the lead of a government efficiency commission under Trump.
While addressing a Trump rally, Musk stated that he would slash up to $2 trillion of the government’s budget ” to get the government off your back and out of your pocketbook,” CNBC reported. However, it is unclear whether his businesses, especially EV maker Tesla will benefit from the Trump presidency.
Tesla share price
Tesla’s share price soared 12 per cent during the day’s trade on Tuesday on expectations of Trump’s return to the White House. However, in the longer run, Tesla may not benefit from the Trump administration since it is likely to be an “overall negative for the EV industry”, said Dan Ives, MD at Wedbush Securities.
The Trump administration is expected to pull down EV rebates and tax incentives in a direct attack on Chinese EV companies such as BYD and Nio, said Ives. In this scenario, Tesla may gain by virtue of its scale and scope.
Tesla has struggled to compete with Chinese EV players with Musk even visiting China to infuse confidence in workers there amid plateauing sales. Tesla’s share price rose 1.2 per cent in the past year compared to a 21.2 per cent year-to-date rise for the S&P 500 index.
Tesla share price target
Ives gave an ‘Outperform’ rating on Tesla with a share price target of $300 apiece. Ten analysts gave an ‘Outperform’ call on Tesla while 16 brokerages gave a ‘Hold’ rating and 8 others gave a Sell call on the EV maker’s stock price, the TipRanks reported.
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