How the Trump administration will add large benefits to Tesla, per Deutsche Bank

Deutsche Bank anticipates more tailwinds ahead for Tesla under the incoming Trump administration. Shares of the electric vehicle behemoth have rallied nearly 37% in November and topped $1 trillion in market value last week for the first time in two years as investors bet that CEO Elon’s Musk close relationship with President-elect Donald Trump will bode well for the company. TSLA YTD mountain Shares this year Musk is already making strides in his alliance with Trump. Deutsche Bank analyst Edison Yu said in a Tuesday report that if Vice President-elect JD Vance were to “take the reins” after Trump, Musk could have a close ally in the White House for eight to 12 years. “Beyond attributing the price action to tactical factors (e.g., retail exuberance, algos, short covering due to lack of near-term negative catalysts, etc.), we see potential large terminal value benefits to Tesla’s efforts in auto, robotaxi, and even humanoid robotics,” wrote Yu. Year to date the stock is up 37%, with the firm’s $295 price target implying roughly 16% downside from Monday’s close. Yu views China as the biggest potential uncertainty for Tesla as the Trump administration touts tariffs on goods from the world’s second-largest economy. Yu said that Musk’s popularity in China could help facilitate a “win-win reconciliation.” A repeal of the Biden administration’s Inflation Reduction Act could also benefit shares of Tesla and give it an edge over legacy automakers General Motors and Ford. Both companies appear to be more reliant on the bill to enhance profitability of their EV businesses and depend more heavily on imported parts that could get taxed under new tariffs, Yu notes. “Tesla’s relative competitive position would only strengthen, in our view,” he wrote. “Tesla already possesses the highest US content of any major models sold in the country … and its scale + cost structure on [battery] EVs is far ahead of competitors.” A Trump administration should also boost Musk’s robotics and robotaxi aspirations, fostering a better loan environment for semiconductors to assist with infrastructure build out, the analyst said. Harsher immigration policies could also lead companies to pour money into automation to make up for fewer laborers, he added. Yu also thinks that Trump could potentially set federal standards for approving and deploying robotaxi rules currently under state jurisdiction. This could benefit the company’s full self-driving initiative. “As we detailed in our deep dive report last month, we believe Tesla’s end-to-end AI approach is best positioned to scale up across many markets, hence, a national standard would benefit it the most on a relative basis,” the analyst said.