Tesla shares have had a week of notable gains, rising about 20% over the past five days and about 52% over the past year. Tesla’s market capitalization surpassed $1 trillion on Friday for the first time in two years.
However, there are some warning signs. At the time of writing, shares are about 4.16% lower at $335.43.
Investors are responding to Tesla CEO Elon Musk’s close association with President-elect Donald Trump, anticipating a beneficial environment for the automaker under the new administration. Federal records indicate that Musk has contributed at least $119 million to pro-Trump efforts.
A notable element of Musk’s relationship with Trump is his appointment to a proposed Government Efficiency Commission, which aims to streamline federal processes and reduce bureaucratic barriers. Analysts have suggested this alignment could bring benefits for Tesla, particularly as the company advances its self-driving and robotaxis ambitions, areas where clarity and regulatory support are key.
Tesla’s focus on self-driving technology has been a strategic priority as the company seeks to integrate self-driving capabilities across its vehicle lineup.
Tesla’s other ventures, including SpaceX, Starlink and Neuralink, also rely on federal approvals, grants and favorable policies.
Despite these developments, Musk’s influence could be carefully scrutinized, with some legal experts suggesting that Tesla’s favor in politics could lead to potential accusations of preferential treatment. However, any legal challenge would take years to develop, giving Tesla time to exploit any short-term regulatory advantages.
Tesla’s positioning in the electric vehicle market remains strong even as Trump has signaled a potential reduction in EV incentives introduced by the Biden administration. Analysts predict that Tesla’s established presence in the market could allow it to weather such policy changes, which could have a more significant impact on smaller startups.