Tesla (NASDAQ: TSLA) is among the major Wall Street names under the lens of investors and analysts ahead of the United States presidential election.
Interest in the electric vehicle (EV) manufacturer is heightened, given CEO Elon Musk is a crucial ally of Republican nominee Donald Trump.
In this context, Wedbush Securities analyst Dan Ives has outlined what to watch for regarding Tesla if Trump wins the White House for a second term.
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Ives, a Tesla bull who sees the company potentially reaching a valuation of $1 trillion, suggested that a Trump victory could create a mixed bag of outcomes if he proceeds to implement his proposed policies on the EV sector and US trade relations with China, he said in an X post on November 4.
The analyst observed that while the EV industry may face challenges under a Trump administration due to the potential repeal of tax credits, Tesla could benefit from its established market presence.
However, Ives warned that harsher tariffs on Chinese imports could pose significant challenges for Tesla’s operations in this critical market.
“Would Trump in the White House be Bullish or Bearish for Tesla? On the margin we would expect EV tax credits to get pulled and negative for EV industry, but a positive for Tesla given scale and scope advantage. Harsher China tariffs on the other hand be a headwind for Tesla in China,” he said.
Impact of Beijing retaliation
Additionally, he highlighted that the proposed tariffs could disrupt supply chains and potentially lead to retaliatory measures from Beijing targeting American tech firms, including Tesla, Nvidia (NASDAQ: NVDA), and Apple NASDAQ: AAPL).
He noted that such tariffs could slow the pace of innovation in the artificial intelligence (AI) sector, which is increasingly intertwined with the automotive industry. This observation aligns with Ives’ view of Tesla as an undervalued AI stock in the market.
When considering Tesla’s price target if Trump wins, a previous Finbold report outlined some potential scenarios.
In this case, a Trump victory is seen as a near guarantee for a Tesla rally, given Musk’s closeness to the former president. Therefore, the stock will likely trade between $280 and $300 in the near term.
This bullish outlook is further supported by the possibility that Musk might serve as the head of the proposed Department of Governmental Efficiency (DOGE) in the Trump administration.
On the other hand, Vice President Kamala Harris’s victory could also be bullish for the EV maker, given her support for clean energy policies.
While these policies may benefit Tesla, the company could still be affected by overall market movements, which may be impacted by a Harris win, considering concerns that her victory could be bearish for stocks.
What next for Tesla stock price
Tesla investors are hopeful the company will resume its recent momentum after announcing an impressive Q3 earnings report.
The report marked a recovery after the disappointing Robotaxi event, where analysts criticized the lack of a clear roadmap for the company’s full self-driving technology. In this regard, TSLA saw an uptick after Musk claimed that ‘Tesla FSD is now almost entirely AI-driven.’
As of press time, Tesla stock was trading at $245.12, down 1.57% since the last market close. The losses are part of broader volatility witnessed in the near term, where the stock has dropped by over 8% on the weekly chart.
The current bearish trend has wiped out Tesla’s positive year-to-date gains, with the stock now down a modest 0.12% in 2024.
Featured image:
ACHPF– Toronto, ON, Canada – August 1, 2024. Digital Image. Shutterstock.
