Tesla stock was hit harder than most after Trump tariffs threatened against Canada and Mexicoroiled car stocksMonday, and it gained less thanFord Motor and Stellantis on Tuesday. Could the reason be Elon Musk?
Tesla sold about 39,000 Cybertrucks in the U.S. in 2024. The EV maker assembles the oddly shaped vehicle at its plant in Austin, Texas.
Tesla is arguably the most American of the major car makers. It has the highest percentage of domestically assembled cars. Most of its models are on on Cars.com’s list of the most American-made vehicles.
Still, Tesla stock lost 5.2% on Monday, closing at $383.68. Ford Motor shares fell 1.7%. General Motors and Stellantis shares dropped 3.2% and 3.9%, respectively.
Tesla stock bounced back with most automotive stocks on Tuesday, rallying after President Donald Trump paused implementing tariffs on Canada and Mexico. Shares closed up 2.2% at $$392.21 while the S&P 500 rose 0.7% and the Dow Jones Industrial Average gained 0.3%.
Ford and Stellantis shares rose 2.7% and 4.1%, respectively. GM stock trailed behind the others, gaining 1.4%.
Ford, GM, and Stellantis have larger presences in Canada and Mexico than Tesla. Still, one reason Tesla stock fell could just be valuation. Its shares are far more richly valued than peers. Tesla stock trades for about 100 times 2026 earnings. Ford, GM, and Stellantis shares trade for an average of closer to five times.
Then there is the possibility that CEO Elon Musk is partly responsible—and that his political activity is giving investors pause.
Musk is the de facto head of the newly created Department of Government Efficiency, which Trump has charged with eliminating government waste. DOGE has gained access to the Treasury payments system, giving it the ability to potentially defund government departments by stopping payments, which caused an uproar on Monday.
Critics such as Sen. Elizabeth Warren called the moves illegal. Musk said DOGE was acting at the behest of the president.
Whatever the back and forth, investors could be becoming increasingly nervous about Musk’s higher political profile.
There is a strong argument that investors still don’t care—or are encouraged by Musk’s move into the government. Coming into Tuesday’s trading, Tesla stock was up more than 50% since the election. That move comes despite Tesla missing fourth-quarter delivery and earnings estimates.
“DOGE we view as a good thing for Musk, more tentacles in Beltway is a good thing for Tesla,” says Wedbush analyst Dan Ives.
He rates Tesla stock at Buy with a $550 price target. That’s one of the highest targets on the Street. Still, the average analyst price target is up more than $100 since the election. Everyone seems to agree Tesla is worth more post-election.
The main way Wall Street sees Tesla benefiting under Trump 2.0 is with federal standards smoothing the introduction of self-driving cars. Tesla plans to launch a self-driving robo-taxi service in 2025. Musk believes Tesla’s highest-level driver assistance product, called Full Self Driving or FSD, will be better than a human driver early this year.
“Musk has discussed FSD/autonomy as the true value of Tesla,” wrote Baird analyst Ben Kallo on Tuesday. “This has been met with a higher level of skepticism from investors, but may have even greater upside than the core Automotive business if successful.”
Kallo values the nascent robo-taxi business at $82 a share. That’s worth about $300 billion based on Tesla’s fully diluted share count. He rates shares Buy and has a $440 price target for the stock.
For now, there isn’t a lot of evidence that Musk’s politics have hurt Tesla. Investors will be watching for self-driving cars, and what develops in D.C.
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