On Thursday, Jefferies Financial analyst Philippe Houchois raised Tesla's target price from $195 to $300, but still maintains a 'hold' rating on the stock. However, Tesla's stock price fell that day as investors worried that President-elect Trump may cancel tax incentives for electric vehicle purchases.

Tesla (TSLA.O) stock fell by 5.8% to $311.18, while the S&P 500 Index and the Dow Jones Industrial Average Index fell by 0.5% and 0.6% respectively. Rivian (RIVN.O) stock plummeted by 14%, while General Motors (GM.N) and Ford Motor (F.N) stocks fell by 0.1% and 0.3% respectively.

At a stock price of $311.18, Tesla's market cap is $999 billion, just a step away from one trillion dollars.

Tesla's stock price remained low throughout the day, with the decline intensifying towards the close. Reuters reported that Trump may cancel the $7,500 tax credit for electric car purchases per vehicle. Trump's transition team has yet to respond to Barron's request for comments.

Investors were surprised by the stock market's reaction, but the policy decision itself was not unexpected. During the campaign, Trump repeatedly mentioned abolishing support for electric vehicles, a move that Wall Street analysts almost unanimously expected regarding this tax incentive policy.

Analysts generally believe that the cancellation of tax incentives will have a limited impact on Tesla, but a significant impact on other electric vehicle manufacturers. Tesla has enough scale and cost advantages to remain profitable even without tax incentives. As competitors heavily reliant on tax incentives weaken, Tesla will further expand its market share.

However, Tesla's stock price on Thursday did not benefit significantly from the bullish news of the target price being raised. Houchois raised Tesla's target price by $105, a staggering 54% increase, and suggested that Tesla take advantage of the recent stock price rise to issue more shares.

According to Wall Street forecasts, Tesla's free cash flow is projected to be $2.8 billion in 2024 and $5.4 billion in 2025. These figures are calculated after deducting expected factory and equipment investment expenditures of $11.5 billion in 2024. Tesla is currently not in urgent need of funding through new stock issuance.

Despite a significant increase in the target price, the market's response to Tesla's stock price has been tepid. Prior to Thursday's trading, since the presidential election on November 5th, Tesla's stock price has risen nearly $80, an increase of 31%.

This round of increases pushed Tesla's market cap above $1 trillion, while also significantly exceeding the current Wall Street target price. FactSet data shows that since the election, analysts have slightly raised the average target price for Tesla from $235 to $242.

It is worth noting that Tesla's stock price rose by 0.5% on Wednesday following an announcement by Trump that Tesla CEO Elon Musk and Vivek Ramaswamy will co-lead advisory work at the newly formed Department of Government Efficiency. This news briefly boosted Tesla but did not offset market concerns regarding policy changes.