Elon Musk's strategic pivot reignites Tesla optimism
Tesla shares saw a surge of 9.57%, reaching a value of $272.60 (£211.20). This change may have been influenced by speculations of a more lenient U.S. tariff policy towards Mexico and Canada, coupled with reports on the development of autonomous driving technology in China. The meeting between Elon Musk and employees also played a role.
The overall improvement in market sentiment contributed to the rise in Tesla's stock. Investors are hopeful that President Donald Trump will refrain from imposing punitive tariffs on imports from Mexico and Canada in April. Tariffs pose significant challenges for car manufacturers who source numerous components from these countries.
According to Reuters, Tesla is preparing to introduce its most advanced driver assistance system, known as Full Self-Driving (FSD), to the Chinese market. This information was shared on the social media profiles of the company's Chinese employees. Enhanced autonomous driving features may help Tesla boost vehicle sales, even though the company charges several thousand pounds for these features, while Chinese competitor BYD offers similar solutions almost for free.
The willingness of Chinese consumers to pay for the FSD system and its impact on Tesla's market share in China will be closely monitored by investors. The introduction of FSD in China was expected, and the company also plans to launch this technology in Europe later this year. While the development of FSD could bring benefits, some initial gains in Tesla's stock likely result from a rebound after significant declines.
Market turbulence and future prospects
On Friday, Tesla shares initially rose by 5.3%. The rise was already fluctuating around 10%. This rebound is crucial because last week marked the ninth consecutive declining week for the company's stock, the longest negative streak in Tesla's trading history.
An earlier increase following the presidential elections contributed to later corrections - from the elections on 5 November to mid-December 2024, the stock rose from about $250 to $490 (£195 to £380). Investors believed that the second Trump administration would benefit the car manufacturer, mainly through regulations facilitating the introduction of autonomous vehicles.
Since the January inauguration, when Tesla's stock began to decline, investors have become more focused on the political activities of CEO Elon Musk and how they may deter traditional Tesla buyers - people with left-leaning views interested in environmentally friendly solutions.
Did Musk save Tesla with a meeting?
Friday's jump followed a meeting between Musk and Tesla employees. For Wall Street, it was enough that he concentrated on the car company instead of his fiscal duties in Washington. Gary Black, co-founder of the ETF Future Fund Active, stated that "Investors roundly cheered Elon’s vision, confidence, spirit, and calmness in praising employees for their efforts during the current media storm."
Wedbush analyst Dan Ives added that the speech "made a huge step forward in our view" and noted that many showrooms in the United States appear to be attracting new Tesla buyers. The result of this volatility is that shares held at around the same level before Monday's trading, though early gains still left Tesla's stock about 37% lower since the presidential inauguration on 20 January.
In the coming days and weeks, further sales data will influence the ratings. Later this week, the European Automobile Manufacturers Association will publish monthly sales data. In January, Tesla's sales in Europe fell by 45% compared to the previous year, partly due to a model change - Tesla is introducing a new version of the Model Y.
Then, on 2 April, Tesla will report its first-quarter sales results. Wall Street anticipates sales of 414,000 vehicles, according to FactSet. However, the latest analyst estimates are closer to 360,000. In the first quarter of 2024, Tesla delivered 387,000 cars.
