Tesla (NASDAQ:TSLA) is one stock that’s likely to be impacted by the outcome of this week’s biggest event: the U.S. Presidential Election.
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Tesla’s CEO, Elon Musk, is closely tied to Trump, having made huge donations to his campaign, while he has shown his support both out in the field and on X, the social media platform he owns.
However, Trump is known for his critical stance on the EV industry. While he owes Musk a debt of gratitude for his support, the question remains: what would a Trump victory mean for the EV industry as a whole, and for Tesla specifically?
Wedbush analyst Daniel Ives thinks one might not necessarily be tied to the other.
“We believe a Trump presidency would be an overall negative for the EV industry as likely the EV rebates/tax incentives get pulled, however for Tesla we see this as a potential positive with some caveats,” Ives noted.
Tesla’s unmatched scale and reach in the industry could provide the company with a “clear competitive edge,” especially against a backdrop of no EV subsidies. Additionally, anticipated higher tariffs on Chinese imports could further limit the influx of affordable EVs from Chinese companies like BYD and Nio, helping Tesla hold on to its leading position in the U.S. market.
Moreover, if Trump wins, he could potentially speed up certain initiatives related to FSD (full self-driving) and autonomous technology, which will be a boon for Tesla (and Waymo too). “However,” Ives goes on to add, “there are other negative implications and ramifications for Tesla if Trump gets elected especially on the China front.”
That is because even though higher tariffs on China could offer some benefits, a big concern for Tesla revolves around retaliatory actions from Beijing that might spark a trade war, creating geopolitical headwinds in this key market. As seen during the first Trump Administration, any problems with China are no good for Tesla, especially given that over 40% of its deliveries are generated in the region and a substantial portion of its production relies on Giga Shanghai.
“Trump getting in the White House would open up a wild card on the China front that would be seen by the Street initially as a negative,” Ives opined on the issue.
For now, ahead of the election, Ives rates Tesla shares an Outperform (i.e., Buy) alongside a $300 price target. The implication for investors? Upside of 20.5% from current levels. (To watch Ives’ track record, click here)
Ives’ take gets support from 10 other analysts but with an additional 16 Holds and 8 Sells, the stock claims a Hold (i.e. Neutral) consensus rating. Meanwhile, most think the shares are due for a pullback; going by the $207.83 average price target, a year from now the stock will be changing hands for a ~14% discount. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
