Tesla's stock price soared on Monday, not only due to expectations for robot taxis, but also because Musk unexpectedly announced his support for Trump's re-election campaign.
Tesla (TSLA.O) rose in early trading on Monday, recovering from last week's disappointing autonomous taxi incident. CEO Elon Musk's political calculations seem to be working.
The electric car manufacturer's stock soared 7% to a high of $265.60 per share on the day. However, the gains didn't hold, with the stock rising 1.8% to close at $252.60, while the S&P 500 index and Dow Jones Industrial Average rose 0.3% and 0.5%, respectively.
Tesla's stock fell about 4% from its closing price on Wednesday last week. According to Bloomberg, Tesla's planned autonomous taxi event on August 8 was postponed to October, causing Tesla's stock to fall more than 8% last Thursday.
Tesla did not respond to requests for comment on the timing of the event. For investors, the delay will bring some uncertainty, not knowing what the electric car maker will now showcase at the event or when Tesla's autonomous taxi will hit the streets.
As for Monday's stock price rally, Musk endorsed former US President Trump in the 2024 presidential campaign after an assassination attempt on Trump at a campaign rally in Pennsylvania over the weekend.
This endorsement is significant for Tesla because Trump has recently been critical of electric vehicles. If he softens his stance on electric vehicle technology, Tesla and other electric vehicle manufacturers will benefit.
Political views play a role in the decision to purchase electric vehicles. Conservative voters tend to dislike electric cars. Surveys from consultancy firms and Wall Street show that about two-thirds of self-identified conservatives would not consider buying an electric car in their next car purchase, while about two-thirds of liberals would consider buying an electric car.
Wedbush analyst Dan Ives recently wrote that Trump's second term will pose a challenge for electric vehicle manufacturers as tax breaks for purchases may disappear. Nevertheless, Tesla is still in the best position to withstand any adverse factors.
"Tesla has an unparalleled scale and scope in the electric car industry, and that power can bring Musk and Tesla a significant competitive advantage in a non-subsidized electric car environment," Ives wrote. Trump's second term may mean that "higher tariffs on China will continue to squeeze out China's low-cost electric car companies."
However, the report was written a few days before the assassination attempt and Musk's endorsement. With Musk supporting Trump, headwinds may not be as strong.
Nevertheless, Ives believes that Trump's reelection has been proven in Monday's trading to be more favorable to Tesla than other electric vehicle manufacturers. Rivian (RIVN.O) fell 3.4%, while Lucid Group (LCID.O) fell 15.1%.
Entering Monday's trading, Tesla's stock performance for the year has been mediocre. However, the stock has risen 79% from its low point in April. Better-than-expected first-quarter earnings, better-than-expected second-quarter deliveries, and a positive outlook for the autonomous taxi event have all helped boost investor sentiment.