Tesla 2024 Surge Faces New Challenges as Investors Eye Trump’s Policy and Autonomous Vehicle Prospects

Tesla (TSLA) saw an impressive 63% increase in its stock price in 2024, with nearly all of that gain coming in the fourth quarter, following President-elect Donald Trump’s victory. Investors are now focused on potential shifts in policy from the upcoming Trump administration, including the possibility of rolling back the Inflation Reduction Act (IRA) and relaxing regulations on autonomous vehicles.

Stock Performance and Market Sentiment
On Monday, Tesla’s stock fell 1%, testing its 10-week moving average at $390.39. Despite this, Morgan Stanley’s renowned auto analyst, Adam Jonas, raised his price target for Tesla from $400 to $430, citing a 9% upside from the current price. Jonas maintains his “overweight” rating on the stock, calling Tesla a “top pick.” He believes that the recent surge in stock value reflects the growing market recognition of Tesla’s unique position in AI, robotics, energy storage, and manufacturing.

Tesla’s Q4 Deliveries and 2025 Forecast
Tesla reported record deliveries in Q4 but fell short of analyst expectations, failing to meet its annual growth targets. The company delivered 495,570 vehicles globally in Q4, while producing 459,445 units. For the full year, Tesla delivered 1.789 million vehicles, slightly missing its 2024 target of “slight” growth. CEO Elon Musk previously suggested that vehicle sales could grow by 20%-30% in 2025, but analysts have noted challenges in the U.S. and European markets, with demand primarily strong in China.

Tesla’s Q4 earnings, scheduled for January 29, will be closely watched, with analysts predicting a 7% increase in EPS to 76 cents and sales of $27.16 billion. Investors are particularly keen on any updates regarding the company’s autonomous vehicle developments and guidance for 2025.

Legal Issues and Governance
In legal news, Tesla’s ongoing battle with its CEO compensation package continues. Delaware’s Court of Chancery recently upheld its decision to reject Elon Musk’s $56 billion pay deal from 2018, now valued at over $100 billion. Tesla has announced plans to appeal the ruling. The pay package was approved by 77% of shareholders in June, but the court ruled that it was invalid, even with shareholder backing.

Autonomous Driving and Full Self-Driving (FSD) V13
Tesla’s Full Self-Driving (FSD) Version 13 was released to a limited audience over the Thanksgiving holiday, though its progress toward true autonomy has not been as rapid as anticipated. Musk has projected that FSD will achieve full autonomy by mid-2025, although previous timelines have been optimistic. Analysts, including Jonas, remain cautious about the short-term prospects for self-driving technology, citing challenges with technology, testing, and regulatory approval.

Impact of the IRA Tax Credit and Trump Administration Policies
Tesla’s stock saw a brief dip in November following reports that the Trump administration might scrap the IRA’s $7,500 EV tax credit. While some analysts believe that Tesla can thrive without the credit, the removal of the incentive could hurt demand, especially as Tesla has already been lowering prices and offering discounts to stimulate sales. The recently announced eligibility of the Tesla Cybertruck for the IRA tax credit could provide a temporary boost in demand as 2025 begins.

The Trump-Musk Strategic Alliance
Tesla investors are also eyeing the potential influence of Elon Musk under a Trump administration. Musk’s close relationship with Trump could result in favorable policies for Tesla, particularly in the areas of autonomous vehicles and EV regulations. However, some analysts, including JPMorgan, warn that Trump’s proposals to eliminate EV subsidies could threaten Tesla’s profitability, especially as the company navigates increasing competition in the electric vehicle market.

Tesla’s New Vehicle Plans and the Robotaxi Event
Looking ahead, Tesla’s upcoming vehicle lineup, including an affordable EV under $30,000 and the highly anticipated Cybercab, is expected to drive growth. However, Tesla’s recent “We Robot” event, where Musk showcased the Cybercab and Optimus robot, was met with disappointment from analysts who felt it lacked substance and detail. Despite the high expectations, the event did not offer significant advancements in Tesla’s autonomous driving technology, which could weigh on investor sentiment in the near term.

As Tesla prepares for another year of innovation, the company’s performance in 2025 will hinge on several factors: regulatory changes under Trump, progress in autonomous driving, the impact of IRA tax credits, and the competitiveness of its electric vehicle lineup.

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