Market Insights

Tesla’s Meteoric Rise: Politics, Policy, and Profits

Amos Simanungkalit · 16 Dec 202420.7K Views

Image Credit: Reuters

Tesla stock (TSLA) surged to another record high on Friday, capping a remarkable week for both the company and its CEO, Elon Musk.

The stock climbed over 4% on Friday, closing at $436.23—a new all-time high. This followed a record close on Wednesday and marked a weekly gain of 12.08%. Since Donald Trump’s presidential election win last month, Tesla shares have skyrocketed by over 73%, fueled by investor optimism regarding Musk’s perceived influence on the incoming administration and Tesla’s future prospects.

A notable factor boosting sentiment was a Reuters report on Friday suggesting that Trump’s team has proposed rolling back a National Highway Traffic Safety Administration (NHTSA) mandate requiring automakers to report accidents involving self-driving systems. This change could significantly benefit Tesla, which has reported more than 1,500 incidents involving its Full Self-Driving (FSD) and Autopilot technologies to NHTSA.

However, the week’s gains weren’t solely tied to politics. Tesla’s China division reported record weekly sales of 21,900 electric vehicles in the first week of December, following a strong November when it sold 73,000 units. These results were bolstered by attractive incentives, including 0% interest loans for five years and a 10,000-yuan ($1,400) discount on new Model Y purchases.

Still, Musk’s connection to the Trump administration appears to have played a significant role in Tesla’s meteoric rise. Analysts, including Edison Yu of Deutsche Bank, John Murphy of BofA, and Adam Jonas of Morgan Stanley, have recently raised their price targets for Tesla, citing Musk’s growing political influence.

Yu increased his price target from $295 to $370, emphasizing the potential for streamlined federal regulations to accelerate Tesla’s autonomous vehicle initiatives. Morgan Stanley’s Jonas reaffirmed Tesla as his "top pick," boosting his target from $310 to $400.

“Clients are increasingly enthusiastic about sectors like AI, renewable energy, robotics, and on-shoring,” Jonas noted, suggesting that Musk’s heightened political presence could broaden Tesla’s impact beyond the automotive industry.