Tesla shares rise 13% as Trump victory paves way for Elon Musk's electric vehicle company

NEW YORK (AP) — Tesla shares soared Wednesday following an election that would send Donald Trump back to the White House, an outcome that had been given Strongly supported by CEO Elon Musk in the final months of the race.

Under a Trump administration, Tesla is expected to make significant profits, with the threat of reduced subsidies for alternative energy and electric vehicles hurting smaller competitors the most.

According to the Energy Information Administration, Tesla dominates electric vehicle sales in the U.S. with a 48.9% market share by mid-2024.

Tesla shares rose 13% on Wednesday, while shares of rival electric vehicle makers slumped.

Trump has proposed tariffs of 10% to 20% on foreign goods that would also impact electric vehicle makers outside the U.S., particularly in China, and shares of electric vehicle makers there also fell in U.S. markets.

“Tesla has unprecedented scale and scope,” Wedbush analyst Dan Ives said in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in an environment without EV subsidies, coupled with likely higher tariffs in China that would continue to squeeze out cheaper Chinese EV suppliers.”

This includes subsidies for clean energy Inflation Reduction Actwhich was signed by President Joe Biden in 2022. It included tax credits for manufacturing as well as tax credits for electric vehicle consumers.

Shares of rival electric vehicle maker Rivian fell 9% and Lucid Group fell 3.1%. NIO, a Chinese electric vehicle maker, fell 6%.

Musk was more than one of Trump's biggest donors $70 million of his own money went into the presidential election and other GOP causes. He also promised to donate $1 million a day to voters who sign a petition for his political action committee.

Still, it was a difficult year for Tesla, as sales and profits fell in the first half of the year. Profit actually rose 17.3% in the third quarter.

The The USA has launched an investigation added to the company's “Full Self-Driving” system after reports of accidents in poor visibility conditions, including one in which a pedestrian was killed. The study covers around 2.4 million Teslas from model years 2016 to 2024.

And investors sent the company's shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio on Thursday evening. Tesla hasn't seen much progress in autonomous vehicles, while other companies have made notable progress.

Tesla began selling the software called “Full Self-Driving” nine years ago. However, there are doubts about its reliability.