Elon Musk-owned Tesla hits $1 trillion market cap on Trump’s election victory, stock surges by 29%

Elon Musk’s Tesla crossed the $1 trillion mark in market capitalisation for the first time in more than two years on Friday, November 8. As per a report by the news agency Reuters, the company’s shares rallied 8.2% to $321.22 on expectations that Musk’s companies will get favourable treatment from the upcoming Trump administration for his support during Donald Trump’s election campaign.

The stock has gained 29% this week, adding over $230 billion in market capitalisation, the report added. This is the company’s best performance since January 2023. Tesla is one of seven companies in the S&P 500 index with this status. The last time its shares traded above this level was in April 2022, Live Mint reported.

"Tesla and CEO Elon Musk are perhaps the biggest winners from the election result, and we believe Trump's victory will help expedite regulatory approval of the company's autonomous driving technology," said Garrett Nelson, senior equity analyst at CFRA Research, to Reuters.

Musk could potentially push for more favourable autonomous vehicle regulations for Tesla and the potential enforcement actions by the U.S. National Highway Traffic Safety Administration regarding the safety of Tesla’s existing driver-assistance systems delayed, Reuters reported citing a source.

Tesla head Musk has shifted his focus on self-driving vehicle technology, moving away from building an economy car costing under $30,000. However, development challenges and regulatory hurdles have postponed the commercialisation of these technologies, the report said.

As per Forbes real-time billionaires list, Musk’s wealth has grown to over $300 billion.

Tesla stock

Tesla’s shares surged in late October following the announcement of its quarterly results as the company reported an increased profit margin and projected 20% to 30% growth in deliveries for the following year, the report noted.

Since Trump’s victory, many billionaires have seen their net worth shoot up. Jeff Bezos, Larry Ellison, Warren Buffett, Jensen Huang, Larry Page and Sergey Brin were among the top billionaires who saw their wealth grow immensely on Wednesday, November 6. These billionaires gained a combined total of over $62 billion when the market closed on Wednesday.

Challenges ahead

Reports have suggested that while Trump's victory could benefit Elon Musk, it also brings forward potential challenges for his business. On one hand, Trump’s policies like reduced government oversight and expedited regulatory approvals for Tesla's self-driving technology can smooth Musk’s path. This can enable faster growth and innovation for the company. Additionally, Trump's stance on imposing tariffs on Chinese imports, including electric vehicles (EVs), might protect Tesla from competition from Chinese EV makers like BYD. Notably, China’s BYD saw its shares fall following Trump’s win.

On the other hand, these policies can also create significant risks for Musk’s Tesla. China is a crucial market for Tesla's growth and rising trade tensions between the US and China could complicate the company's operations there. Moreover, while Trump’s opposition to pro-EV policies can potentially hurt Tesla’s competitors, as per another report by Reuters, it can also reduce government incentives for EV adoption. This can limit market expansion and growth opportunities for the broader EV sector.

Musk's support of Trump's campaign

Musk backed Trump’s 2024 campaign financially, reportedly contributing around $132 million towards it. Additionally, he not only reinstated Trump’s previously suspended X (Twitter) account but also amplified his "Make America Great Again" (MAGA) agenda through his platform. According to a Bloomberg report, X’s algorithm reportedly pushed pro-Trump content more and favoured right-leaning content. Musk himself shared pro-Trump posts on X, reshared content from Trump supporters and hosted discussions about the election. Furthermore, he advocated for Trump’s policies as well.

As Donald Trump won the election battle and is set to become the 47th US president, all eyes are on the direction his presidency will take. There is widespread speculation on the changes in domestic and foreign policies, from economic recovery and trade relations to international diplomacy and security issues.