Tesla (NASDAQ:TSLA) shares have surged nearly 40% over the past four trading sessions following Donald Trump’s return to the White House. Despite Trump’s historically skeptical stance on EVs, his growing connection with Elon Musk could mark a shift in policy. Musk’s influence and possible role within the administration may set the stage for a more favorable environment for the EV giant.
That’s certainly the view of Bank of America analyst John Murphy, who noted, “A Trump administration could ease regulations, supporting TSLA’s growth trajectory. On that point, the Biden administration has launched several probes into TSLA’s FSD system, and we see potential for less aggressive scrutiny under a Trump administration.”
Additionally, Elon Musk has suggested a national framework for regulating self-driving cars, which the Trump administration has shown a willingness to consider. This could simplify the launch of Tesla’s Robotaxi service planned for next year, which currently needs approval on a state-by-state basis.
Trump has little time for climate change or environmental policies (which in a sense formed the foundation for Tesla’s initial value proposition) and somewhat ironically, that could also prove fruitful for Tesla. He has signaled an intention to ease environmental regulations, which could prompt “incumbent OEMs” to slow their EV expansion plans due to reduced regulatory pressure that currently drives the shift from ICE (internal combustion engine) vehicles to EVs.
“This could help TSLA maintain its hold on the domestic EV market, especially as it is planning to release new models with more affordable entry prices,” Murphy opined. Additionally, the Trump administration is expected to adopt a “tougher stance” on China, meaning some of Tesla’s competitors might not enter the US EV market.
While other commentators have noted the latter point could backfire when considering the potential retort from Beijing to any tariffs, that’s not a risk brought up by Murphy. The analyst does make the case, though, that if the Trump administration moves forward with proposals to limit or eliminate tax credits for EVs and subsidies for automakers producing cars and batteries in the US, it could result in an impact on Tesla’s growth. “However,” he goes on to add, “we believe TSLA would be less impacted than competition so may benefit on a net basis.”
To this end, Murphy rates Tesla shares a Buy, while lifting his price target from $265 to $350. However, with TSLA’s current price hitting this level, Murphy may soon need to reconsider his target. (To watch Murphy’s track record, click here)
How does the rest of Wall Street feel? Tesla stock currently claims a Hold consensus rating, based on 16 Holds, 11 Buys, and 8 Sells. Most analysts anticipate a significant pullback, with the average price target of $207.83 implying a ~41% decline over the next year. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
