Tesla (NASDAQ:TSLA) shares, despite a 6% drop on Tuesday, have been on a strong rally since Trump’s election victory, driving the stock past the $1 trillion market cap threshold. Investors are evidently confident the new administration will be wholly favorable to Elon Musk’s endeavors, considering the amount of support he showed in the run-up to the election.
Wedbush analyst Daniel Ives agrees with that sentiment, saying the Trump White House win will be a “gamechanger for the autonomous and AI story for Tesla and Musk over the coming years.”
“In essence,” Ives goes on to say, “Musk made a strategic and big bet on a Trump White House win that will be known as a ‘bet for the ages’ for TSLA bulls as now Tesla and Musk are set to reap the benefits from a new friendlier regulatory era in the Beltway ahead.”
Given the autonomous/FSD timeline will probably be accelerated beginning next year and is a “major tailwind” for the timing of the Cybercab launch, Ives expects the Trump win will assist in unlocking “autonomous/AI value” to Tesla’s stock. Ives reckons that the AI and autonomous driving opportunity alone is worth $1 trillion for Tesla.
The irony is that Trump is no fan of EVs, and his administration is set to be a negative for the industry, as it is “very likely” the EV rebates/tax incentives will be pulled. For Tesla, though, this is a “potential positive.” Tesla’s unmatched scale and reach within the EV industry could provide the company with a “clear competitive edge,” particularly against a non-EV subsidy backdrop beginning next year.
Additionally, expected increases in tariffs on Chinese imports could further limit the entry of affordable Chinese EV brands like BYD and Nio into the U.S. market in the years to come, thereby helping Tesla keep its market share.
That said, there are some caveats to the bullish thesis. Higher tariffs on Chinese imports could backfire given the potential for “retaliatory policies.” That could set the scene for a trade war and create “geopolitical headwinds” for Tesla in its highly important China market.
“To this point,” Ives goes on to explain, “China is a key market for Tesla and we anticipate some carve outs for both Tesla and Apple on the China tariff front and also expect Musk to have a very big role (not a formal Cabinet position) in a Trump White House and be heavily involved in the China tariff discussions in early 2025.”
With these favorable factors in mind, Ives has raised his price target for Tesla from $300 to a Street-high of $400, implying a 14% upside in the coming months. His rating for the stock remains Outperform. (To watch Ives’ track record, click here)
10 other analysts join Ives in the TSLA bull camp, but they are pitted against 16 Holds and 8 Sells, all culminating in a Hold (i.e. Neutral) consensus rating. Meanwhile, most think the shares are substantially overvalued; at $207.83, the average target factors in a 12-month drop of ~37%. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.