The U.S. presidential election is expected to impact the stock of electric vehicle maker Tesla (TSLA).
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On the eve of Americans heading to the polls, TSLA stock is down 2% and more volatility is expected for the stock depending on whether former Republican president Donald Trump beats current Democratic vice-president Kamala Harris and regains the White House.
In recent weeks, Tesla CEO Elon Musk has publicly campaigned in support of Trump, appearing at rallies with the former president and donating more than $100 million to his reelection campaign. There is speculation online that Musk might be given a cabinet position in Trump’s administration is he wins the presidency following the November 5 vote.
Regardless, Musk has become closely associated with Trump and chatter on social media is that TSLA stock is likely to rise or fall in coming days depending on the outcome of the national election.
EV Credits at Stake?
Beyond Musk’s political support of Trump, some analysts and pundits say that a Trump presidency would be better for the economy, markets, and electric vehicle producers such as Tesla. At stake might be electric vehicle purchase tax credits that help drive Tesla’s sales.
Analysts and pundits are debating whether Trump or Harris would be better for the “green economy,” and battery-powered motor vehicles. There is some concern that a Harris administration might rollback or cancel electric vehicle purchase tax credits for consumers and zero-emission vehicle credits that Tesla is able to sell to other automakers.
Tariffs on Chinese Imports
Those tax credits amount to nearly $2,000 for each electric vehicle that Tesla sells and are a big incentive for consumers and benefit to the company’s finances. At the same time, a Trump administration is expected to mean lighter regulations for self-driving cars, which Tesla is heavily investing in and betting on for its future growth.
Dan Ives, a leading analyst at Wedbush Securities, also noted in a recent report that a Trump election victory is likely to lead to tougher tariffs on imports of Chinese electric vehicles, preventing them from flooding the U.S. market, which would be positive for Tesla. Ives rates TSLA stock at Buy with a $300 price target.
TSLA stock is down 2% on the year.
Is TSLA Stock a Buy?
Tesla stock has a consensus Hold rating among 35 Wall Street analysts. That rating is based on 11 Buy, 16 Hold, and eight Sell recommendations issued in the last three months. The average TSLA price target of $207.83 represents 14.90% downside risk from current levels.
