Tesla’s stock rose 10% on Monday in response to news that the Trump administration will likely apply reciprocal levies on April 2 and exclude a set of sector-specific duties.
TakeAway Points:
- Tesla shares surged 10% after this year’s steep decline following reports the Trump administration is likely to exclude a set of sector-specific tariffs while applying reciprocal levies on April 2.
- Data from Edmunds shows that Tesla owners have been trading in their vehicles at record levels since CEO Elon Musk joined Trump’s White House.
Tesla lowers share price draw investors
Traders also took advantage of the near 40% decline in the stock so far this year to buy into the EV maker.
The tariff optimism set off a rally on Wall Street, with technology stocks leading the surge, pushing the three main U.S. indexes to two-week highs.
Tesla was on track to record its biggest one-day percentage jump since November 6 – when Trump won the U.S. presidential elections – if current gains hold.
The company continues to be the most valuable automaker in the world with a valuation of about $870 billion. It hit a peak market capitalization of $1.54 trillion when the stock reached a record high in December.
The stock has had a turbulent run in the first quarter of the year, battered by rising competition, weak EV demand and worries around CEO Elon Musk’s political involvement taking away focus from the business.
Last Thursday, Musk urged investors to “hold onto your stock” in a late-night Tesla “all hands” meeting that was livestreamed on Musk’s social media platform X.
Tesla was the most actively traded stock by retail investors, with buy orders outnumbering sell orders by a ratio of 1.9 by 11 a.m. ET, according to J.P.Morgan data.
The EV maker’s shares were heavily oversold and Musk’s statement last week about the company’s bright future and his advice to hold onto shares kickstarted a two-day rally, said Dennis Dick, a trader at Triple D Trading with a long position in the stock.
Dick added that reports of reciprocal tariffs not being as broad as initially feared have contributed to the rally in all stocks, with Tesla benefiting from the news.
Market competition
Tesla’s shares trade at 85 times earnings expectations, compared with single-digit figures for automakers such as Ford and General Motors, according to data compiled by LSEG.
Tesla’s Chinese competitor BYD recorded a 73% jump in fourth-quarter profit on Monday and said its annual revenue for 2024 crossed the $100 billion mark, surpassing the U.S. automaker.
“Tesla, which has been clobbered with more bad news today courtesy of record sales from its Chinese competitor BYD, was riding high at the top of the S&P gainers, with some investors possibly considering that the fall from grace may be over,” Danni Hewson, head of financial analysis at AJ Bell, said.
Tesla owners are trading in their EVs at record levels
As Elon Musk wraps up his second month in the White House, Tesla owners are trading in their electric vehicles at record levels, according to an analysis by national car shopping site Edmunds.
The data from Edmunds published on Thursday said that March represented “the highest ever share” it had seen for Tesla trade-ins toward new or used cars from dealerships selling other brands.
Since heading to Washington, D.C., in January as a central figure in the second Trump administration, Musk, who is CEO of Tesla, has been slashing the federal workforce and government spending, and has gained access to sensitive government computer systems and data, though his efforts have been repeatedly challenged in court.
Before assuming leadership of the so-called Department of Government Efficiency, or DOGE, Musk spent around $290 million last year to help propel President Donald Trump back to the White House.
While investors snapped up Tesla shares after Trump’s victory in November, they’ve been rushing for the exits of late, pushing the stock’s price down by 42% this year. Waves of protests have targeted Tesla facilities in the U.S. and beyond. Other criminal acts of vandalism and arson have targeted Tesla stores, vehicles and charging stations across the U.S.
Competitive market
In addition, Tesla is facing increased competition from EV makers. In January, S&P Global Mobility found Tesla sales declined about 11% year over year in the U.S., while Ford, Chevrolet and Volkswagen bolstered their sales of EVs, picking up market share.
“Shifts in Tesla consumer sentiment could create an opportunity for legacy automakers and EV startups to gain ground,” Jessica Caldwell, head of insights at Edmunds, wrote in an email. “As Tesla brand loyalty and interest wavers, those offering competitive pricing, new technology, or simply less controversy could capture defecting Tesla owners and first-time EV buyers.”
The Tesla brand, more than that of any other automaker, is tightly tied to its CEO. In August 2024, Edmunds surveys found that just 2% of car shoppers in the U.S. were unfamiliar with Musk.
Edmunds also said that shopping for new models of Tesla vehicles on its platform dropped to its lowest level last month since October 2022 after peaking as late as November.
Even before Musk began heading up DOGE, Tesla’s brand was suffering. Its brand value fell by 26%, or about $15 billion, in 2024, a second straight annual decline, according to research and consulting firm Brand Finance.
Many car shoppers trade in their Tesla EVs for a newer model Tesla. Edmunds data didn’t account for those transactions.
