NEW YORK (AP) — For Elon Musk fans, it’s the half a trillion-dollar bet.
That is how much the stock market value of Tesla has rocketed since the presidential election, a vertiginous climb uninterrupted in recent days despite a disappointing financial report that would have sunk the stock of nearly any other company.
Investors are wagering that President Donald Trump will help Musk’s company more than hurt it with his plans to take an axe to reams of Washington regulations and wield tariffs to get his way with key trading partners.
Less regulation? Fantastic. Trade war? No biggie.
“It’s going to be a golden age for Tesla and Musk,” said Wedbush Securities financial analyst Dan Ives, adding after an investor conference call Wednesday, “This is the bullish I’ve ever heard Musk.”
Investing in Tesla has long been a gamble. Odds were against Musk creating a successful electric car company, never mind growing it to become the world’s most valuable automaker – and in the process making himself the world’s richest man. But this latest bet seems particularly risky.
Musk says the true value of company lays in a future of Tesla robots, thousands of them possibly by the end of the year, and in unsupervised, driverless vehicles. He promised in Tesla's investor conference call to start offering such robotaxis in June in Austin, Texas, and across the country by the end of next year.
Speeding all that along will be Trump, or so the story goes, who has given Musk an office in the White House and made him the head of the new Department of Government Efficiency tasked with shrinking the size of the government.
Trump’s new transportation secretary, who can have a big impact on Tesla, is mostly sticking to the script. Sean Duffy has promised to cut excessive regulation on automakers as well as to come up with a single set of federal rules on self-driving technology to replace a patchwork of state-by-state ones that Musk has blasted for holding back development.
Perhaps more importantly, Trump has softened his stance toward China, a big market for Tesla, hitting the country with an additional 10% tariffs starting Saturday, and not the 60% he threatened on the campaign trail. Still, Trump's decision to impose tariffs on Canada and Mexico, as well as China, sent the stock down more than 5% in early trading Monday, in line with other automakers. Chief Financial Officer Vaibhav Taneja said last week the company should feel an impact to its business because it sources parts from around the globe.
Trump has also vowed to do other things that will hurt Musk’s business.
Trump said he wants to eliminate a $7,500 federal tax rebate designed to get people to buy electric vehicles. He also plans to lower emission standards, a potential blow to Tesla’s business of selling “regulatory credits” to car makers that pollute more and fall short of the requirements. Tesla sold $692 million of these credits i n the last three months of 2024, a 60% jump from a year ago, revenue that nearly all flows straight to Tesla’s bottom line.
It’s also unclear whether the Trump administration will hold off on investigations into Tesla, in particular a technology the company calls Full Self-Driving, a misnomer because the vehicles could require human intervention at any moment. In October, the transportation department’s auto safety regulator, the National Traffic Highway Safety Administration, launched the latest of several probes into the technology after getting reports of crashes in low-visibility conditions, including one that killed a pedestrian.
Transportation Secretary Duffy promised senators at a hearing earlier this month that he would let the Tesla investigations follow the facts — specifically vowing to buck any political pressure to go easy on the self-described “first buddy” of the president.
Musk will need all the regulatory relief and other goodies from Trump that he can get.
In early January, Tesla said sales dropped in 2024, a first in more than a dozen years, as rivals such as BMW, Volkswagen and China’s BYD come out with competitive EVs and steal market share.
Then on Wednesday, Tesla reported revenue, profits and other key measures of financial health for the last quarter of 2024 all fell short of what analysts had expected. The stock climbed higher anyway.
“Things that would hurt other automakers,“ marvels Morningstar analyst Seth Goldstein, ”don’t seem to impact Tesla.”
Besides the business, Tesla shareholders must always keep one eye on the CEO himself. Lately, that’s meant weighing Musk’s foray into politics.
On Inauguration Day in the U.S., Musk made a straight-arm gesture during a speech that many interpreted as Nazi salute. He scoffed at the criticism, but the backlash was fierce nonetheless. In Germany, an image of Musk making the salute was projected onto his massive Tesla factory outside Berlin in protest. In Italy, a communist youth group hung an effigy of Musk upside down in the same square in Milan where the fascist dictator Benito Mussolini was strung upside down, too.
“How many of these Tesla buyers agree with Musk?” said Felipe Munoz, a senior analyst at auto researcher Jato Dynamics. “I don’t see the point of alienating potential customers.”
Musk also risks turning off regulators in Europe, who he hopes will soon approve the use of Full Self-Driving there.
If investors start losing faith in Musk, it’s a long way down.
The run-up in Tesla stock alone since the election amounts to more than the annual economic output of 160 countries. Tesla’s total market value has grown to about $1.3 trillion, more than the worth of General Motors, BMW, Ford, Ferrari, Porsche and a dozen other top car makers combined.
Musk thinks that, if anything, the stock should be higher.
“I see a path for Tesla being the most valuable company in the world — by far, not even close,” he said Wednesday, before doubling down on that statement. “There is a path where Tesla is worth more than the next five companies combined.”
That would mean surpassing the likes of Microsoft, Apple and Nvidia. Tesla is currently the seventh-most valuable company in the S&P 500.
Wedbush's Ives, the “golden age” analyst, agrees the stock can only go up from here.
“The bet for the ages that Musk made was on Trump,” he said. “Musk is going to have massive impact on deregulation in the beltway — and that is worth a trillion dollars.”
