Tesla’s stock rose sharply on Wednesday, with investors believing that the company and its CEO, Elon Musk, will benefit from Donald Trump's return to the White House. Under a Trump administration, Tesla might gain an edge over smaller competitors if subsidies for electric vehicles (EVs) decrease. Trump’s plans to impose high tariffs on Chinese imports could also delay cheaper Chinese EVs from flooding the U. S. market.

"Tesla is in a league of its own, " noted Wedbush analyst Dan Ives. "This situation could give Musk and Tesla a competitive advantage if subsidies are reduced and tariffs on Chinese EVs increase. "

While Tesla’s stock soared by over 14%, shares of other EV makers like Nio, Rivian, and Lucid Group dropped. Tesla leads the U. S. EV market with nearly 49% share, according to the Energy Information Administration.

Subsidies for clean energy were part of the Inflation Reduction Act, signed by President Joe Biden in 2022. This act included tax credits for both manufacturing and consumer purchases of EVs.

Musk supported Trump’s campaign, spending over $119 million to mobilize Trump supporters. He also pledged to give away $1 million daily to voters signing a petition for his political action committee.

Despite a rough start to the year, with declining sales and profits, Tesla's third-quarter profit rose by 17. 3%. However, the company faced challenges, including a U. S. investigation into its "Full Self-Driving" system after reports of crashes, including one fatal incident.

Investors were disappointed by Tesla's recent unveiling of its robotaxi, seeing little progress compared to other companies in autonomous vehicles. Tesla has been selling the "Full Self-Driving" software for nine years, but its reliability remains questionable.

After recent gains, Tesla's stock is up 16% for the year.

Tesla's Stock Surges: What Trump's Win Means for Elon Musk

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