Tesla Under Trump 2.0 Era: Positioned for Explosive EV & AV Growth?

Since Donald Trump's victory in the 2024 U.S. presidential election, Tesla TSLA has been making waves in the stock market. Yesterday, shares of TSLA rose 5.6%, fueled by reports that the incoming Trump administration plans to push for a federal framework supporting self-driving vehicles. Given CEO Elon Musk's strong relationship with Trump, Tesla's ambitions in both autonomous and electric vehicle (EV) domains seem to be on the verge of a major acceleration.The Musk-Trump ConnectionMusk played a significant role in Trump’s return to the White House, and their rapport is already bearing fruit. Last week, Trump appointed Musk to co-lead the newly established Department of Government Efficiency (DOGE), emphasizing deregulation and cost-cutting. For Tesla, this is more than just political favor. Being buddies with the President surely has its benefits! Being the co-leader of DOGE, Musk secures a pathway to advance Tesla’s innovative goals without excessive regulatory red tape. And Trump’s administration also gains a tech visionary.And now, Trump’s plans for a streamlined federal framework for autonomous vehicles (AVs) would remove significant hurdles that have hampered Tesla’s rollout of Full Self-Driving (FSD) technology. Musk’s longstanding dream of a fleet of robotaxis, initially unveiled through the "Cybercab" concept, could become a reality soon.Accelerating TSLA’s Robotaxi GameTesla’s aspirations in the robotaxi space are ambitious.With a Trump-led initiative to simplify AV regulations, Tesla could gain a clearer runway to deploy its autonomous fleet. Tesla’s FSD system is currently available in a supervised capacity but the company expects to transition to unsupervised operation in select states like Texas and California by next year.Musk has promised ride-hailing robotaxis in Texas and California, and a few other states by next year, pending regulatory approval. And under Trump’s presidency, bureaucratic hurdles could get much smoother.The Cybercab, a $30,000 two-seater devoid of steering wheels and pedals (expected to be launched in 2026), will be Tesla’s bold entry into the autonomous vehicle market.Trump’s push for easing the rules on driverless cars strengthens Tesla’s standing against Alphabet’s GOOGL Waymo, which is currently leading the robotaxi race.Shares of Uber UBER and Lyft LYFT took a hit yesterday following reports of Trump’s AV regulatory stance. Amid concerns that Tesla’s robotaxi network could disrupt their dominance in the ride-hailing market, shares of both LYFT and UBER fell close to 5% yesterday.TSLA Stands Insulated From EV Tax Credit RemovalIn the EV market, Tesla stands apart from traditional automakers like Ford and General Motors, which still lean heavily on EV tax credits. In fact, Trump’s push to repeal the $7,500 EV tax credit aligns with Musk’s perspective. Musk himself has advocated for eliminating EV tax credits, arguing that it levels the playing field. Tesla’s early investment in EV technology gives it a distinct advantage over competitors that still rely on federal incentives. Unlike its rivals, Tesla has largely outgrown the need for such incentives, thanks to its massive scale, high brand loyalty, head start in production and a sprawling Supercharger network.Other Bullish Catalysts for TSLAFlourishing Energy Generation & Storage Business: Tesla’s revenues from this business have exploded, growing at a triple-digit compound annual growth rate (CAGR) over the past three years. Though it remains a small segment of Tesla’s business, its robust growth and juicy margins should be a significant catalyst in the long term.Cybertruck Sales: Tesla CEO Elon Musk revealed that the Cybertruck became the third best-selling EV in the United States in the third quarter (only behind the Tesla Model Y & Model 3). As Tesla becomes more efficient at producing Cybertrucks, deliveries should soar.Strong Financials: High liquidity and low leverage provide Tesla with the financial flexibility to tap growth opportunities. Tesla exited the third quarter of 2024 with cash/cash equivalents/investments of more than $33 billion. Its long-term debt-to-capitalization of around 7% compares favorably with the industry’s 40%. Tesla’s operating cash flow also hit a peak of $6.3 billion in the last reported quarter. Image Source: Zacks Investment ResearchTSLA’s Rising EstimatesThe Zacks Consensus Estimate for Tesla’s 2024 and 2025 EPS has moved north in the past 30 days. The consensus estimate suggests that Tesla’s earnings will jump by a healthy 29.5% in 2025.Image Source: Zacks Investment ResearchTesla Shares on FireThe stock has rallied more than 90% in the past six months, breezing past the industry, sector and the S&P 500.Given the trend of upward earnings estimate revisions aligning with Musk's optimistic outlook for FY25 (vehicle deliveries to surge 20-30% next year) and, of course, the Trump effect, TSLA stock rally is expected to continue.6-Month Price Performance ComparisonImage Source: Zacks Investment ResearchLast WordMusk played a pretty important role in helping to get Trump elected. And Tesla stock is reflecting the role Musk now plays in the broader political sphere. The Trump-Musk dynamic might just prove to be the catalyst Tesla needs to accelerate its next phase of growth. As Tesla navigates the Trump 2.0 era, the company is uniquely positioned to capitalize on a favorable regulatory and innovation-driven climate to realize its electric and driverless ambitions.TSLA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tesla, Inc. (TSLA): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report Lyft, Inc. (LYFT): Free Stock Analysis Report Uber Technologies, Inc. (UBER): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks