Musk's support for Trump increases the value of Tesla to over 1 trillion dollars!
Tesla shares rose 8.2% last Friday, pushing its market capitalization above $1 trillion (0.93 trillion euros) for the first time in more than two years. Tesla benefited from Trump's victory in the US election, fueled by expectations that his administration will give the electric car maker favorable treatment.
Tesla CEO Elon Musk was a prominent supporter of Trump's campaign, contributing at least $130 million (€121 trillion). Before the election, Tesla was the worst performer among the US tech giants, the so-called "Magnificent Seven."
After a 29% post-election surge, the US-based firm regained popularity, with its shares now up 30% year-to-date, reaching a market valuation of $1.03 trillion (€0.96 trillion) as of the close. of Friday.
Robotaxi and FSD technology have recently become a focal point for Tesla, with CEO Elon Musk indicating that the company may launch autonomous ride-hailing services in Texas and California, with the potential to expand to other states by 2025. pending regulatory approval.
The Trump administration could improve Tesla's chances of securing approval for its autonomous technology for public use, potentially accelerating growth in the business. In overseas markets, Tesla faces stiff competition from Chinese electric car maker BYD and Japanese automaker Toyota. Trump's proposed tariffs could also benefit Tesla in key markets, thereby strengthening its competitiveness.
However, Trump could remove all subsidies for electric vehicles in the US, which under the Biden administration gave Tesla $739 million (€685 million) in regulatory credits in the third quarter. This increases Musk's urgency to overcome regulatory hurdles for his long-awaited Robotaxi services. Its Cybercab could potentially enter mass production by 2026 or sooner, as Musk has indicated.
It is worth noting that the rise in Tesla shares was not only due to Trump's election victory. The world's largest electric car maker has demonstrated a significant turnaround in its performance in the third quarter. Tesla's core automotive revenue rose 2% year over year, returning to growth after declines in the previous two quarters. Total revenue rose 8% year over year, marking the strongest growth in a year.
Elon Musk predicts that car shipments will grow by 20%-30% in 2025, signaling a rebound in demand for electric vehicles. Tesla delivered 462,890 electric vehicles in the third quarter, a 6.4% year-over-year increase and a return to growth after two consecutive quarterly declines. This was also the highest third quarter figure and the third largest quarterly total in the company's history.
One notable highlight is Tesla's Energy division, which continued its rapid growth, with revenue up 52% year-over-year in the third quarter. The Energy business achieved a record gross margin of 30.5% in the third quarter. Additionally, Tesla's Cybertruck turned a profit for the first time. Production of an affordable car is also on track to begin in the first half of 2025, with volume expected to increase by 50%.
However, the 29% weekly gain in Tesla shares may reflect an overvaluation, as fundamental changes have yet to materialize. Until policies are officially adopted in its favor, the stock may be overvalued. Tesla's price-to-earnings ratio rose to 88 from 68 in just one week, surpassing that of AI chip maker Nvidia at 69. For Tesla to maintain this valuation level, earnings growth would have to accelerate significantly in the future.
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