Tesla stock (NASDAQ: TSLA) has been on a significant upswing since Donald Trump’s recent election victory, with shares surging nearly 40% in a few short trading days. Boosted by anticipated regulatory rollbacks and enthusiasm from Wall Street analysts, Tesla’s growth prospects appear brighter than ever under the projected pro-business Trump administration. Tesla CEO Elon Musk, who supported Trump’s reelection, may play an influential role in shaping upcoming policies on autonomous vehicles and artificial intelligence.
Investment bank Wedbush took the lead among financial institutions re-evaluating Tesla’s prospects. Analysts raised their price target for Tesla stock from $300 to $400, driven by expectations that the incoming administration will help fast-track Tesla’s ventures into self-driving technology and AI. In their note to clients, Wedbush analysts described the Trump administration as “a gamechanger for the autonomous and AI story for Tesla and Musk over the coming years.” They estimate that autonomous driving and AI innovations could be a $1 trillion opportunity for Tesla as it expands its role in future transportation.
Tesla’s relationship with federal regulations has been complex in recent years. Under the Biden administration, Tesla’s Full Self-Driving (FSD) technology faced scrutiny, with several probes launched into its safety standards. However, industry analysts believe the Trump administration may ease regulatory pressures on FSD systems, allowing Tesla more flexibility to innovate. John Murphy, a Bank of America analyst, echoed this sentiment, stating that the Trump administration’s lighter regulatory approach could “support TSLA’s growth trajectory.”
In addition to potential regulatory relief, some analysts expect Trump’s administration to push for a national framework on self-driving cars, a move that Musk has previously championed. This could simplify Tesla’s rollout of its planned Robotaxi service, currently pending approval on a state-by-state basis.
Tesla’s latest gains have brought its stock to around $353.26, and the stock is currently trading at levels last seen in spring 2022. Although the recent rally has reignited investor interest, some analysts have raised concerns over Tesla’s valuation, which now stands at 88 times trailing earnings and 322 times free cash flow. These elevated multiples suggest that Tesla would need to grow rapidly to justify its current price levels, especially as political landscapes can shift quickly and alter policy priorities in four years.
Yet, analysts remain divided on the impact of Trump’s policy proposals for the broader electric vehicle market. Trump has signaled a reduced emphasis on climate regulations, which historically spurred the adoption of electric vehicles and drove incentives for EV manufacturers. While this shift might slow down EV growth for traditional automakers, it could help Tesla maintain its stronghold in the EV market as it prepares to release new, more affordable models.
On Wall Street, Tesla stock has mixed recommendations, with an overall “Hold” consensus from analysts. Despite the bullish outlooks from Wedbush and Bank of America, some analysts remain cautious, noting that Tesla stock may experience a pullback after its current rally. The average price target from Wall Street is around $207.83, suggesting that Tesla’s current price could decline by approximately 41% over the next year.