Diverse DigestWith the 2024 US presidential election just weeks away, Tesla’s future may be at a pivotal moment as CEO Elon Musk’s increasing political involvement plays a role. Saxo Bank’s Chief Macro Strategist, John J. Hardy, outlines how the election outcome could significantly impact Tesla’s stock, market share, and business strategy.
Tesla’s Brand in the Political Spotlight
Tesla’s brand could become a political statement as Musk’s outspoken support for Donald Trump raises concerns among left-leaning consumers. Musk has committed $45 million monthly to a political action committee (PAC) backing Trump’s campaign, a move that risks alienating parts of Tesla’s consumer base. Hardy notes that Musk’s polarizing persona could have “negative implications” for Tesla’s brand, particularly among Democratic and international customers. Recent polls show only 6% of Democrats have a favorable opinion of Musk, while 62% of Republicans view him positively.
While the Tesla Cybertruck may appeal to conservative buyers, Hardy warns, “The political sensitivity could be as great or even greater abroad, in China, Europe, and elsewhere,” where Tesla has significant market share.
Subsidies at Stake for Electric Vehicles
The continuation of EV subsidies is another key concern for Tesla. Under President Biden’s Inflation Reduction Act, EV manufacturers receive a $7,500 subsidy per vehicle produced in the US. Trump, however, has criticized green energy policies and vowed to eliminate such subsidies. Musk has supported Trump’s stance on ending subsidies, despite Tesla benefiting from them for years.
Hardy cautions that if Trump wins and ends subsidies, Tesla and other US EV producers could face short-term challenges. “Any gridlock or Harris-victory scenario is a clear positive for Tesla, as the subsidies would remain for now,” Hardy explains.
Tariffs and Global Trade Concerns
Tariffs also pose potential risks for Tesla, especially in its international markets. Musk has praised Chinese EV makers as Tesla’s strongest competition. A Trump victory could lead to broader tariffs on Chinese goods, which might protect Tesla’s US market share but also spark retaliatory tariffs in other regions.
Hardy highlights that a Harris win would maintain the status quo, while Trump’s tariff policies could force Tesla to shift production and raise costs, particularly if international markets respond with trade barriers.
Tesla’s Future Tied to Autonomous Driving
At the core of Tesla’s valuation is its promise to deliver fully autonomous driving technology. As the election approaches, the timing and regulatory approval of autonomous vehicles are critical. Hardy emphasizes that Tesla’s stock price depends largely on the success of its autonomous driving systems and its ability to launch new products, such as the delayed RoboTaxi.
“Tesla faces many risks in the wake of the election, but the greatest risk is its valuation, which is chiefly supported by claims that it can deliver a fully autonomous driving experience,” Hardy concludes.
As the election nears, Tesla’s market strategy and future prospects hang in the balance, shaped by the intersection of politics, regulation, and technology.
Diverse Digest
