How Are Tesla and EV Stocks Reacting to Trump’s Plan to End EV ‘Mandate’?

• Tesla and EVs stocks were falling on Wednesday after President Trump revoked a Biden EV order.
• However, an executive order related to AVs lifted some autonomous vehicle stocks.
• Tesla received two massive price target upgrades, despite the EV order.

At the same time, autonomous vehicle stocks were soaring.

Electric vehicle (EV) manufacturer Tesla (NASDAQ:) saw its stock drop, along with other EV companies, after President Donald Trump revoked an executive order by his predecessor that promoted EVs.

On his first day in office, Trump revoked former President Joe Biden’s executive order issued on August 5, 2021, called “Strengthening American Leadership in Clean Cars and Trucks.” That Biden executive order, among other things, set a goal of having 50% of all new passenger cars and light trucks sold in 2030 be zero-emission vehicles.

Trump revoked this order and invoked his own EO, called “Unleashing American Energy.” This order, among other things, will “eliminate the ‘electric vehicle (EV) mandate’ and promote true consumer choice, which is essential for economic growth and innovation, by removing regulatory barriers to motor vehicle access; by ensuring a level regulatory playing field for consumer choice in vehicles; by terminating, where appropriate, state emissions waivers that function to limit sales of gasoline-powered automobiles; and by considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies and effectively mandate their purchase by individuals, private businesses, and government entities alike by rendering other types of vehicles unaffordable.”

EV Stocks Trending Lower

It is not clear if the “unfair subsidies” refer to the $7,500 tax credit to buy clean vehicles, which was part of the Inflation Reduction Act (IRA). But it could mean that EV infrastructure funding could be halted or delayed, as Trump ordered all grants and loans from the IRA to be paused.

The flurry of changes was not unexpected, as Trump had talked about these plans on the campaign trail. Yet, EV stocks were all down on Tuesday and dropping again on Wednesday. The largest EV manufacturer Tesla, saw its stock price drop 2.6% on Wednesday to around $418 per share.

Rivian (NASDAQ:) was down 3% to under $13 per share, while Li Auto (NASDAQ:) was off 3.5%. In addition, major manufacturers, including Ford (NYSE:), Toyota (NYSE:), and General Motors (NYSE:), all saw their stock prices drop.

These developments would appear to be less than favorable for EV stocks going forward, although it is not clear exactly how these executive orders will play out. So why did Tesla stock get two massive price target upgrades this week?

AVs not EVs

While EVs appear not to be high on the priority list for Trump, AVs, or autonomous vehicles may be. Among his executive orders on Monday, Trump revoked a Biden directive that created a framework for regulatory oversight of AI and its developers. This essentially removes any guardrails for AI development and is designed to foster innovation.

The Trump administration has spoken much more favorably about the opportunities with AVs. At his confirmation hearing last week, new Transportation Secretary Sean Duffy said the administration wants to encourage AV innovation.

“This is not just a wonderful technology that has [the] potential of making our roads safer, but this is a national security issue. We can’t fall behind China or other countries as it comes to AV technology. Right now, we have a patchwork of laws from state to state. I believe there has to be a federal law by which all of these innovators can abide by it, no matter if they’re in Texas or in California or somewhere else,” Duffy said.

“But after safety, we want to give a wide runway for these companies and innovators to create products that are going to bring us this new technology that, again, can revolutionize the way we get items, how we travel. It can be remarkable and exciting,” Duffy said, according to The Verge.

It is within AVs and through AI, like its Optimus humanoid robots, that analysts see Tesla flourishing. At a Tesla event in New York City back in October, Tesla CEO Elon Musk said: “I think this will be the biggest product ever of any kind.”

Analysts Raise Tesla’s Price Target

Wedbush raised Teslaʻs price target to $550 this week, noting its bright future in AI and with AVs.

“We are raising our price target on Tesla from $515 to $550 as we have growing confidence in the demand delivery story for 2025 along with a fast-tracking of the autonomous future under the Trump Administration. Our time spent speaking to many in the Beltway the last few weeks give us a growing confidence the Trump White House the next 4 years will be a “total game changer” for the autonomous and AI story for Tesla and Musk over the coming years. Our bull case remains $650 for 2025,” Wedbush analyst Daniel Ives wrote, according to Street Insider.

Piper Sandler upped Teslaʻs price target $500, from the current $418, based on the same AI and AV catalysts.

It is also worth noting that two autonomous air taxi stocks, Joby Aviation (NASDAQ:NYSE:) and Archer Aviation (NYSE:) each spiked 12% yesterday.

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