Tesla’s shares plummeted by 8%, marking the steepest decline in months, after experiencing explosive growth since the presidential election. Despite the recent pullback, the company closed at $440.13, up 75% since November 5, reflecting a major post-election rally. The automaker’s drop coincided with a broader market decline. Before Wednesday’s drop, Tesla was sitting at $479.86 and coming off a 38% rally in November, marking the best monthly performance since January 2023 and its tenth-best month on record.
Tesla’s rally success is primarily due to Elon Musk’s politicking and newfound alliance with President-elect Donald Trump. Musk is one of Trump’s biggest supporters, reportedly pouring millions into Trump’s campaign. His clout with the incoming administration and new role as head of the Department of Government Efficiency (DOGE) could easily influence federal regulations –particularly those governing autonomous vehicles.
While Tesla doesn’t produce robotaxis, it’s lagging behind competitor Waymo, a ride-hailing service that uses autonomous vehicles to transport passengers. Waymo announced that it’s conducted over 4 million robotaxi trips in 2024 and currently operates within four major U.S. cities. It plans to expand further next year.
While Tesla’s current focus remains on driving EV sales, it’s been eyeing the autonomous vehicle space. Musk aims to establish a streamlined federal approval process for autonomous vehicles. This feat would make it easier to roll out its infamous Cybercab and bolster its position within the competitive autonomous vehicle sector. However, the company’s vision faces significant challenges, including public resistance, with 41% of Americans disapproving of Musk’s prominent role in the Trump administration. In addition, Musk’s recent legal conflict with the SEC adds another layer of uncertainty to the company’s future.
The automaker’s upcoming Q4 results and year-end vehicle delivery report will be available in January and should provide a more transparent look into the company’s trajectory. However, Musk’s political influence will play a pivotal role in maintaining Tesla’s dominance in the EV market and firmly securing its place in the autonomous vehicle market.