Tesla broke out of USD300 resistance. What's next?
Tesla's stock has surged past the USD1 trillion valuation and USD300 a share – seemingly over the assumption that the Trump and Musk relationship is going to benefit the automaker.
I will discuss the fundamentals of the company, followed by its technical analysis.
The company is virtually worth more than the next 10 biggest automakers combined.
GM has a PE of around 6 while Tesla's PE is way overvalued around 88.
Tesla stock is built around hype, hopes and dreams of it being a market leader in robotaxis and humanoid robots and commanding a large market share in those fields in 2030. Its stock is pricing in 6 years ahead now.
Waymo is the market leader in robotaxis and is likely to command a significant share. It can scale up rapidly by partnering with ride-hailing companies or EV makers.
Figure.AI and Boston Dynamics are market leaders in humanoid robots and may command large market shares.
So the reality is that Tesla may only get small market shares in robotaxis and humanoid robots and their revenue and net profits may be much lower.
Tesla has extended its post-election rally – resulting in its valuation surpassing USD1 trillion for the first time in years. The automaker's share price jumped nearly 30% since Tue as Donald Trump stormed back into office after winning the US presidential elections.
Considering there has been no significant news concerning Tesla this week other than the US elections, it's fairly clear that the latest rally is related to the election and the close relationship between Elon Musk and Donald Trump.
Tesla added over USD200 billion to its valuation since the election. That's a whole Toyota added to its valuation.
Trump is anti-EV and made it clear that he wanted to remove the EV incentives that kept Tesla's sales from falling in the US over the last few years. This will make Tesla's vehicles more expensive, but some Tesla shareholders are hoping that it will cripple other EV competition, leaving Tesla alone in the future.
They are expecting something similar with the tariffs that Trump has been promising to impose on goods coming from other countries.
The auto industry is globalized and US automakers rely on parts from other countries, but on average, Tesla is more vertically integrated than other automakers.
While all automotive costs are likely to go up, Tesla investors believe the company will be able to stomach the tariffs better than the competition.
Within a scenario where EV incentives are removed and automotive costs increase due to tariffs, EV adoption goes down in the US. Electric vehicles will be more expensive at the sticker price and historically, that has always resulted in fewer sales.
It's going to be true of Tesla and all other EV automakers. The only way you can see that as been good for Tesla is if that kills the other automakers and only Tesla survives.
Tesla's EV sales benefitted greatly from EV incentives and will suffer without them. GM and Ford still have hybrids and ICE cars to fall back on and may not be as badly affected as Tesla.
So what do Musk really hope to gain from Trump?
There are theories that Trump could make it easier for Tesla to obtain a robotaxi licence and maybe stop National Highway Traffic Safety Administration (NHTSA) investigations or get favourable outcomes from the investigations.
While automotive manufacturing is still the bulk of Tesla's business, Musk was clear that he believes that "Tesla is worth nothing without self-driving." Trump can't help Tesla achieve self-driving, but he may help Tesla more easily roll out robotaxis when/if it solves self-driving.
With lax regulations, Tesla may get the robotaxi licence. But Tesla has yet to apply for licence to test robotaxis. Waymo took around 6 months, so Tesla may take around the same time. Then Tesla need to do at least 6 months of testing. That means that the end of next year may be up before Tesla can get a robotaxi licence.
If the regulations are not stringent and Tesla robotaxis get into accidents, their operations may be suspended for months. The authorities may only allow 2,500 robotaxis on the road initially and increase slowly.
Musk has said that the cost of a robotaxi ride is the price of a bus fare. I don't know how many drivers will sign up if they earn so little.
So the revenue and net profit from robotaxis may be much lower than expected.
The road forward for Tesla's robotaxi aspirations is bumpy. This week, the NHTSA flagged Tesla for its social media posts about the Full-Self Driving software - the underlying technology powering its future robotaxi and current EVs.
NHTSA made an email public on Fri, asking Tesla to "revisit its communications" regarding the messaging around FSD. Even though Tesla encourages driver supervision for FSD, the title has drawn criticism for being misleading. FSD is a Level 2 driver assistance system with a sketchy safety record. NHTSA has asked Tesla to respond to the letter by Dec 18.
Just days after the robotaxi reveal, NHTSA opened another investigation into 2.4 million Teslas equipped with FSD after four reported collisions, including a fatal crash. Those include all Teslas manufactured from 2016 onwards, including the Cybertruck. So even though the Trump win paints a rosy picture for the automaker, there's a long way ahead before FSD truly earns public trust.
Technical analysis
Tesla broke out of the resistances around 271 and 300. It may be trading in an uptrend channel. It may rise to around the 340 resistance. It may reverse from there and fall to around the 271 resistance-turned support.
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MonkeyGee : so did XPENg. I saw the xpeng tech day 2025 this weekend. Did you see how fast their cars charge and those X bots are becoming very real. it makes me want to buy more. it's crazy how much xpeng has achieved in such a short timeframe.
Momentum Trader : Very bullish sentiment post election…it can only go up for now until the next market correction. I’m riding the
bullrider_21 OP MonkeyGee : Yes, fast charging. Xpeng has been making flying cars and humanoid robots for a few years now. They have the best ADAS.
bullrider_21 OP Momentum Trader : Be careful. Don't get caught when the rug gets pulled.
bullrider_21 OP : Tesla also generates a lot of money by selling zero emission vehicle, or ZEV, credits to auto makers that don't make enough zero emission cars. Most of those credits, however, arise from states following California's emission standards.
Trump might actually seek to end California's ability to regulate its emissions, according to BofA Securities analyst John Murphy, like Trump did in his first term. That would hurt EV producers including Tesla. Since the end of 2018, Tesla has generated almost USD10 billion in credit sales. That represents roughly 25% of the USD36 billion in operating profit Tesla has reported over the same span.