Why Tesla stock is surging today

Donald Trump’s victory in the 2024 presidential election has sent Tesla Motors (NASDAQ: TSLA) stock on a somewhat surprising rollercoaster ride.

Thanks to Elon Musk’s role in the incoming administration and his political alliance with the Republican President-Elect, TSLA shares began rocketing on November 6. Still, some subsequent policy headwinds – primarily the plans to cut the $7,500 electric vehicle (EV) tax credit – also triggered a significant correction.

The latest development, however, was upward as Tesla stock rocketed in the extended session between Friday, November 15, and Monday, November 18. Specifically, TSLA shares had their latest close at $320.72 but surged 7.89% by press time to $346.04.

Here’s why TSLA stock is rocketing

The latest rally was triggered by the news that the incoming Trump administration plans to prioritize creating a federal framework for developing self-driving technology.

Elon Musk’s EV maker is heavily involved in the drive toward autonomous cars, as exemplified by its 2024 updates to ‘full self-driving’ (FSD) and the showcase of the ‘Robotaxi’ on October 10 – and the promise such vehicles would hit the streets sometime in 2025.

More broadly, the ‘Robotaxi’ and FSD represent a major part of Tesla’s growth argument. The company’s billionaire CEO is attempting to solidify its image as an artificial intelligence (AI) and technology firm rather than a traditional car maker.

While details are scarce, at press time on November 18, the reasoning behind investors’ positive reaction is easy to see. Making a federal autonomous vehicle framework a priority signals greater incentives and prominence for the sector in the coming years, and as the most recognizable name in the industry, Tesla is highly likely to benefit.

Simultaneously, with Republicans historically being in favor of deregulation, Elon Musk’s EV maker could benefit from the removal of guardrails, particularly as it is facing some roadblocks in the form of a government probe into accidents and at least one death involving FSD.

Why Tesla is expected to rise under Trump

Tesla’s size and prominence have been repeatedly cited as part of the company’s bull case under Trump. Multiple analysts, including Wedbush’s Dan Ives, have described the incoming Republican administration as a major growth catalyst and opined that it could help Musk’s car company unlock the next $1 trillion of value.

Indeed, despite Donald Trump’s government being widely expected to remove many of the incentives for purchasing an EV, Tesla is likely to better absorb the headwinds than most other players in the sector and, therefore, gain even more market share against its West-based competitors such as Rivian (NASDAQ: RIVN) and Lucid (NASDAQ: LCID).

Elsewhere, though the promised Trump tariffs might impact Tesla’s supply chains, they will simultaneously insulate the firm from competition from Chinese EV giants such as the biggest such company in the world – BYD.

Featured image via Shutterstock