Investing.com -- Despite concerns that the new Trump administration’s policies could be detrimental to electric vehicles (EVs), Tesla’s stock has surged 28% since Trump’s election, Bernstein said in a memo on Monday.
In its note, the firm explored the reasons behind the move and examined how Tesla—and Elon Musk—might actually benefit from the administration’s approach.
While Trump’s policy positions could pose challenges for Tesla (NASDAQ:TSLA), such as ending consumer and battery manufacturing tax credits under the Inflation Reduction Act (IRA), loosening emissions standards, and imposing tariffs on Chinese batteries, Bernstein highlights potential silver linings.
“As Trump stated, ‘I’m for electric cars. I have to be because, you know, Elon endorsed me very strongly.’ Musk is also now the co-lead of the new Department of Governmental Efficiency,” Bernstein noted.
They believe that one major potential advantage for Tesla is the acceleration of its Full Self-Driving (FSD) technology.
Tesla explains that favorable legislative changes and pro-FSD appointments to the National Highway Traffic Safety Administration (NHTSA) could fast-track testing timelines for Tesla’s autonomous driving ambitions.
However, Bernstein cautioned that success hinges on technological efficacy. “If it doesn’t work, consumers and states will push back on or ban the technology,” they wrote, adding that self-certification could expose Tesla to significant liability risks.
Other potential benefits for Tesla include unique production subsidies tied to volume, favorable tariff treatment, or even government fleet purchases of Tesla vehicles, which could provide a “4% volume tailwind.”
Additionally, Bernstein noted that the Trump administration’s policies might bolster Musk’s other ventures, including SpaceX, Starlink, Neuralink, and xAI.
However, Bernstein remains cautious overall on Tesla, maintaining an Underperform rating on the stock with a $120 price target. They emphasized that regulatory shifts and autonomy advancements still face substantial hurdles.