Authored by Akash Sriram
(Reuters) – Tesla’s market value surged past the $1 trillion milestone in a significant rally on Friday, driven by expectations that CEO Elon Musk’s company will receive favorable treatment under President-elect Donald Trump for its strong support during the election campaign.
The electric vehicle manufacturer’s stock soared by 8.2% to reach $321.22, propelling its valuation above the trillion-dollar mark for the first time in over two years.
With a 29% increase this week, Tesla added over $230 billion in market capitalization, marking its best performance since January 2023.
“Tesla (NASDAQ:) and CEO Elon Musk stand to benefit greatly from the election outcome, and we anticipate that Trump’s victory will accelerate the regulatory approval process for the company’s autonomous driving technology,” stated Garrett Nelson, senior equity analyst at CFRA Research.
The billionaire entrepreneur could advocate for favorable regulations regarding autonomous vehicles that Tesla is developing, as well as influence the U.S. National Highway Traffic Safety Administration to postpone any potential enforcement actions related to the safety of Tesla’s current driver-assistance systems, as per a Reuters source.
Musk has shifted his focus towards self-driving vehicle technology, abandoning plans for a sub-$30,000 economy car due to development and regulatory challenges delaying the commercialization of such innovations.
“If Musk can sway Trump to establish federal regulations for autonomous vehicles, it would be beneficial for the auto industry as a whole, as companies prefer uniform regulations rather than varying state laws,” noted David Whiston, equity strategist at Morningstar.
Forbes’ real-time billionaires list indicated Musk’s wealth surpassing $300 billion.
Tesla’s shares surged in late October following a rise in quarterly profit margins and a forecast of 20% to 30% growth in deliveries for the upcoming year.
For years, Tesla has maintained its position as the world’s most valuable automaker, with competitors such as Toyota Motor (NYSE:), China BYD (SZ:), and others trailing far behind.
Tesla’s shares are trading at 93.47 times their 12-month forward earnings estimates, in comparison to 38.57 for AI chip giant Nvidia (NASDAQ:), 30.77 for Microsoft (NASDAQ:), and 6.29 for Ford (NYSE:).