President-elect Donald Trump is set to assume office in less than a week on Jan. 20. His reelection sent jitters across the clean energy ecosystem, and not without reason. Trump has vowed to end the “EV mandate” — policies designed to disincentivize driving gas-powered cars — on the very first day of his presidency.
Tesla (TSLA) was a notable exception to the clean energy bloodshed. The stock, which was having a lackluster year prior to November, ended up gaining over 62% in 2024. The bulk of these gains came after the election results.
Elon Musk Is Among Trump’s Key Advisors
The reason for this is that Musk, the richest person in the world, has also been tapped to head the newly created Department of Government Efficiency (DOGE) with Vivek Ramaswamy. This position suggests he is one of Trump’s key advisors and has the ability to influence his policy decisions. To illustrate this, the New York Times reported that Musk is set to get office space in the White House Complex.
His position of prominence has also pressured the stocks of companies that are on the wrong side of policies that Trump and Musk seem set to back. This has also led some companies to quickly pivot on their strategies and public stances.
For instance, JPMorgan Chase (JPM) dropped its lawsuit against Tesla, while Rivian (RIVN) settled its 4-year-old trade secret lawsuit with the Elon Musk-run company a few weeks after the November election. Meta Platforms (META) and Amazon (AMZN) have scaled back their diversity, equity, and inclusion (DEI) programs, and the former even ended its third-party fact-checking program. Reports of TikTok’s U.S. operations being sold to Musk don’t look utterly unbelievable given the way the winds are blowing.
Tesla Stock Has Come Off Its Highs
Meanwhile, Tesla stock has come off its record highs and is almost flat for the year to date. Although it has since rebounded, one reason for its cooling performance is its dismal 2024 delivery report. For the first time in history, Tesla reported a year-over-year drop in annual deliveries. This came in contrast to Tesla’s Q3 earnings call in October, when the company expressed confidence that its deliveries would rise on a yearly basis.
TSLA Stock 2025 Forecast
Tesla remains a polarizing stock. Of the 38 analysts actively covering Tesla, 12 rate it as a “Strong Buy” and two as a “Moderate Buy.” 14 analysts rate it as a “Hold” while 10 rate it as a “Strong Sell.” It carries a mean target price of $309.78 with a Street-high and Street-low target price of $515 and $120, respectively. Morgan Stanley analyst Adam Jonas – a long-time Tesla bull – has raised his bull case target price on Tesla to $800. However, his base case target price of $430 implies single-digit returns over the next year.
It is quite unusual for any company of Tesla’s size to have such disparity in its target prices, but with Tesla, such anomalies are more of a norm than an exception. Valuing Tesla has been a challenge, with analysts divided on whether it is an automaker or a tech stock. Tesla’s $1.2 trillion market capitalization is over four times that of Toyota (TM), the world’s largest automaker. In fact, Tesla is valued higher than all leading automakers put together.
What Does a Trump Presidency Mean for Tesla?
Trump clawing back EV-friendly policies like the EV tax credit, carbon credits, and subsidized loans to EV companies would be negative for the sector. However, given Tesla’s strong financial position and still-healthy margins, it would be able to withstand any adverse policies much better than other players. But then, Tesla is not only about electric cars, and by Musk’s admission, the company’s valuation is linked to the progress of its autonomous driving technology. The company will use autonomous driving to power its upcoming robotaxi, dubbed the Cybercab.
Importantly, Tesla stock rallied since Trump’s election in hopes of a more favorable policy environment toward self-driving cars. Reports suggest that Trump might ease crash-reporting requirements, which would be a big positive for Tesla, as the company has clashed with regulators over multiple crashes – including fatal ones – linked to its Autopilot and Full Self-Driving (FSD).
TSLA Is the Ultimate “Trump Trade”
While the Trump Media & Technology Group (DJT) is a key play on the president-elect, Tesla could be the ultimate “Trump trade.” The Elon Musk-run company would stand to benefit from any “supportive” policies by the Trump administration.
While Tesla’s valuation would appear stretched based on its near-term earnings potential, the company has upcoming products like robotaxis and the Optimus humanoid robot in its arsenal that can drive long-term value. Despite valuation concerns, it is hard to build a case for selling Tesla shares ahead of Trump’s inauguration, and I would continue to bet on the stock for more gains.
On the date of publication, Mohit Oberoi had a position in: TSLA , RIVN , GM , AMZN , AAPL , META . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.