EVS Tesla Stock Jumps. Trump Gives More Than He Takes
Tesla stock rose sharply early Monday after Bloomberg reported Sunday that President-elect Donald Trump would seek to create a federal framework for self-driving cars.
Shares of the electric-vehicle maker rose more than 8% in premarket trading, slipping back for a gain of 6.5% to $341.56 shortly after the open. The S&P 500 was up 0.1% and the Dow Jones Industrial Average was flat.
Tesla didn’t respond to a request for comment about the report.
States, for the most part, issue licenses for self-driving cars. A federal framework could make it easier to obtain self-driving licenses and, of course, let autonomous cars drive across state lines.
“This would be a huge step forward in easing U.S. rules…and be a significant tailwind for Tesla’s autonomous and AI vision heading into 2025,” wrote Wedbush analyst Dan Ives in a report Sunday.
Tesla uses AI to train its cars to drive themselves. Tesla’s highest-level driver assistance product, called Full Self Driving, or FSD, can do most of the driving most of the time but still requires constant human supervision. Tesla believes it is on the cusp of its cars driving better than humans all of the time; it plans to launch a self-driving taxi service in late 2025.
“Musk’s significant influence in the Trump White House is already having a major influence,” added Ives. Musk backed Trump’s presidential bid and the two have become close. They even attended together Saturday’s UFC mixed martial arts fights held at New York’s Madison Square Garden.
“The golden path for Tesla around Cybercabs and autonomous is now within reach with an emboldened Trump/Musk strategic alliance playing out in real-time and very in line with our [Tesla investment] thesis,” Ives said.
He rates shares Buy and has a $400 price target for the stock. The average price target among analysts tracked by FactSet is about $245 a share, up about $10 since the election.
Monday, Barclays analyst Dan Levy increased his price target for Tesla stock to $275 from $235 but kept his Hold rating on shares. Levy acknowledged that a second Trump administration would benefit Tesla’s self-driving efforts but not enough to change his rating.
Bernstein analyst Toni Sacconaghi, who rates the stock at Sell, left his price target at $120 in a recent report, saying technology is more important than regulation at this point. The cars have to drive themselves before a national standard matters to Tesla.
Self-driving legislation would be an example of Trump giving something after taking something else away from the EV industry. Late last week, Reuters reported that the Trump administration would seek to eliminate EV purchase-tax credits.
That move is widely expected and could mean slower growth for EVs in the U.S. Most of Wall Street believes Tesla would be affected the least because it has the global scale and cost structure to remain profitable without credits.
Coming into Monday, Tesla stock had risen about 29% in 2024 and 28% since the Nov. 5 election. Investors believed a Trump win would help Tesla. A national self-driving standard is one example of the tailwinds expected.
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