What Does the President Trump Future Hold for Tesla Stock?
We’ve covered a lot of the potential negatives that President-elect Donald Trump might bring to Tesla Motors Inc (NASDAQ:TSLA) and Tesla stock, not to mention the technology industry more broadly. But with Tesla stock outperforming many other tech giant stocks this week, some are asking if maybe the Trump Musk dynamic might break in favor of the green tech company.
Tesla stock had a solid week, gaining around 4.5%, a sight higher than most other larger tech shares. News that Elon Musk would serve as an adviser to Trump certainly didn’t hurt TSLA stock prices, but going forward, what will happen to the company under the President Trump administration? (Source: “Is Tesla a Trump stock?” CNBC, December 14, 2016.)
First we have to delve into the complicated Trump Musk relationship. Before being named as an adviser, Elon Musk wasn’t Trump’s most fervent critic by any means—often maintaining a neutral to slightly negative tone on the president-elect—but he did let fly a few barbs during the campaign.
But, with the election over and Trump Musk now on (seemingly) friendlier terms, it makes sense why Trump would favor at least some of Tesla’s policies.
First, the company is looking to expand its American production lines. With more and more automakers looking to cheaper labor forces abroad, Tesla seems committed to maintaining at least a sizable production force in the United States. This would go hand-in-hand with Trump’s rallying cry to bring back industrial manufacturing jobs.
Another aspect that Trump might appreciate about Tesla is the company’s eye for innovation. Say what you will about the president-elect, but the man seems to appreciate daring entrepreneurs, and Elon Musk is nothing, if not bold.
There are still a few roadblocks for the Trump Musk relationship and Tesla stock. Trump may try to cut or renegotiate electric vehicle subsidies, which would hurt Tesla’s car sales. The future president is also not yet on board with climate change, which would affect SolarCity Corp (NASDAQ:SCTY). Tesla acquired SolarCity in late November.
So what does the future hold for the Trump Musk dynamic and Tesla stock? Hard to tell. There’s certainly room for the two to work together in a number of areas, but also several potential causes of friction. Investors would do well to keep an eye on the developing relationship between the president and the company, as it will almost certainly have a profound affect on Tesla stock going forward.