"Trump’s 2024 Re-election Alters Renewable Energy Market: Tesla Soars, Others Face Uncertainty"
- Bocconi Students Financial Markets
- Apr 24
- 8 min read
Introduction:
In the last couple of decades, the question of sustainable development has been at the centre of many debates, not only in the political field but also in financial markets and investment portfolios. Two innovative ideas aiming at the common goal of sustainability would be expected to grow and fail together, depending on the demand expectations and market conditions. However, a mixture of different conditions has created a particular scenario: European energy security questions linked with the Russian-Ukrainian war, post-covid inflation, the German fiasco of abolishing fossil fuels and, most importantly, the recent re-election of Donald Trump as the 47th American president. Within this article, we will look more closely at the sustainability market, specifically at its most famous and prominent projects, how they have been influenced recently by the change of administration in the White House and what the markets expect for the future.
Analysis:
Tesla
Starting with one of the most famous examples, Tesla, Inc.. The company was founded in 2003 and IPOed in 2010. Tesla’s initial strategy centered on hastening the shift to eco-friendly transportation by introducing high-end electric vehicles (EVs) and cheaper options. At first, Tesla intended to create a luxury sports car to demonstrate the capabilities of electric power, leading to the creation of the Tesla Roadster. The earnings and credibility generated from this first product were meant to support the creation of additional electric vehicles that are more affordable, resulting in the Model S, Model 3, and future models. The focus was on vertical integration and improvements in battery technology to decrease expenses and enhance production scalability.
Regulatory Landscape for Tesla Post-Election
Following Trump’s election, Tesla shares surged nearly 15%, boosting Elon Musk’s net worth by approximately $15 billion. However, on November 12th, Tesla shares slipped as part of a broader market cooling, though the company remains significantly more valuable than before Election Day.
Morgan Stanley analyst Adam Jonas noted that Musk’s new political influence could accelerate Tesla’s expansion beyond the automotive sector. In a recent statement, Trump announced his intention to create “Department of Government Efficiency” (DOGE), aiming for a smaller, more efficient government as a gift for America’s 250th Anniversary of The Declaration of Independence. Trump’s statement suggests that this new department would “provide advice and guidance from outside of government,” indicating that Musk, who is currently serving as its head, will not take a formal role as a federal official.
The new department’s name appeared to play on another of Mr. Musk’s many investments: the cryptocurrency Dogecoin, which the billionaire regularly promotes to others.
Nevertheless, Trump did not provide details on how Musk would manage this task without conflicts of interest, especially given SpaceX’s $10 billion in federal contracts over the past decade. Musk might adopt a similar strategy to the one he used when he bought Twitter.
Additionally, Musk’s other companies face investigations and lawsuits by federal agencies, raising concerns about potential conflicts of interest as Musk oversees agencies that regulate his businesses.
Competitive Environment in the EV Market and Tesla’s Path Forward Post-Election
The global automotive market is famous for its stark competition. With increasing friction from old-school carmakers entering the EV Market, Tesla, an established leader in the field, is currently facing a path filled with challenges and opportunities. The post-election landscape introduces potential advantages for the company.
Tesla’s Challenges Before the Election - Rising Competition
Tesla got to a rough start in 2024 by losing more than 94 Billion in Market Valuation in the first two weeks of the year. The challenges continued throughout the year when its share of the EV market fell below 50% for the first time in Q2 to 49.7%, down 10% from last year. Growth of the EV Market has also slowed down, showing signs of maturity. This decline can be attributed to the emergence of several competitors, such as BMW, KIA, and General Motors, with models like the BMW i5, Kia EV9 SUV, Cadillac Lyriq and chinese manufacturers infringing Tesla’s dominance. Despite this, the company remains at the top, with Ford holding the second position with the rising sales of Mustang Mach-E and F-150 Lightning models.
Tesla’s Resilience
Despite the increasing competition in the EV market, Tesla’s profitability and diversified business model set it apart from traditional carmakers, who struggle with weaker demand and rising costs. Competitors, like GM, keep reporting losses, while Tesla has achieved record-low production costs. What’s more, Tesla’s edge lies beyond car manufacturing, as it generates substantial revenues from carbon credit sales ($2.5 Billion last year) and expanding solar and battery divisions.
The Post-Election Landscape
Tesla seems to be benefiting from Musk’s close ties with the new president-elect Donald Trump. The shares are up 32.5% from election day, while the election results are proving challenging for Rivian and the Chinese BYD. This not only stems from Musk’s friendship with Trump but also from the elect’s promise to “end the electric vehicle ‘mandate’ on day one.”
Biden’s Inflation Reduction Act has offset Tesla’s competitors’ losses in the EV Market by offering tax credits worth up to $7500 for new buyers of EVs. Tesla competitors benefit more from tax breaks because Tesla sells cars outright, allowing consumers to claim the full tax savings. Thus, taking away the subsidy “will only help Tesla”, as Musk said in July on X. What’s more, Musk is more likely to advance Full Self Driving with Trump on his side.
This led to Tesla’s market value surging $300 billion since the election, reflecting investor confidence about potential regulatory relaxation.
Our Take on Tesla
Tesla has been hugely influenced by the actions and reputation of its CEO, Elon Musk. During the buyout of Twitter and the possible refusal to buy the brand, Tesla Stock has been affected since it created uncertainty among investors, as well as by Musk’s legendary Tweets, which he used to increase its wealth through BitCoin or overvalued Tesla stocks. As we can see, the market has quickly and positively reacted to Musk’s support for Trump. Hence, we believe this will be positive information for the stock value and the company’s future performance.
First Solar
First Solar is a pioneer in renewable energies and advanced solar technology. Its original business plan aimed to revolutionize the solar energy market by producing thin-film photovoltaic (PV) modules at lower costs compared to traditional silicon-based panels. The company focused on developing cadmium telluride (CdTe) technology, which allowed for cheaper and scalable production processes. The company quickly spread across the United States and has rapidly expanded across other countries like India and Vietnam. First Solar’s strategy emphasized large-scale manufacturing and deployment to reduce costs and make solar energy more competitive with fossil fuels. By focusing on utility-scale solar projects, the company aimed to position itself as a leader in renewable energy solutions from early on.
Effects of Trump re-elections on First Solar
However, Trump’s recent re-election in 2024 may cast a shadow over its growth trajectory. During his past administration (2016–2020), Trump favored fossil fuels and rolled back regulations on green energy. As a result, his re-election on November 5th introduced a wave of uncertainty for renewable energy companies like First Solar. The company, named “The Climate Tech Company to Watch in 2024” by MIT Technology Review, saw a significant decline in its stock price immediately after the election.
Due to its innovative technology, First Solar is now one of the leaders in the renewable energy markets, with confirmed orders for its solar panels totalling 76 gigawatts of capacity and delivery schedules up to 2030.
Yet, during his mandate, Trump pulled the U.S. out of the Paris Climate Accord in 2017, made a rollback on the Clean Power Plan introduced by Obama a few years earlier, reduced the federal renewable energy budgets and had a more broadly policy focused on fossil fuel energies.
As a result, the stock price went down 12% on November 5th. Investors are cautious. This political shift could have major effects on the solar technology markets, and even if today’s issues would most likely favor the renewable industry, Trump’s past policies point to a decline in company growth.
Nevertheless, on the long term outlook, new elections take place every four years, but the demand for green, renewable energy has been constantly growing over the years. While the company faces some durability issues for its perovskite material, it is still very probable that thanks to its multiple innovations, it will be able to sustain its competitiveness despite political headwinds over time.
Our Take on First Solar
In conclusion, while Trump’s re-election brings uncertainty to First Solar’s immediate growth prospects due to potential policy shifts favouring fossil fuels, the company’s long-term outlook remains optimistic. The global demand for renewable energy continues to rise, and First Solar’s technological innovations and leadership position in the market provide a strong foundation for future success. Despite political challenges, the company’s resilience and strategic investments may enable it to adapt and thrive in an evolving energy landscape.
Conclusion: Direct Consequences of Trump’s Re-election on the Renewable Energy Sector
As we have shown in two perfect examples, Donald Trump’s re-election on November 5th, 2024, immediately set the stage for renewed market shifts in the energy landscape, however, not equally. We can conclude that the renewable energy markets reacted strongly to Trump’s victory, experiencing notable declines in the immediate aftermath. Those included First Solar and other companies such as Enphase Energy (down more than 18%) and Brookfield Renewable Partners (down over 8%). NextEra Energy also experienced downward pressure as investors anticipated reduced federal support. We see many reasons for investors’ new behavior, from the expected phase-out of federal incentives such as the Investment Tax Credit (ITC) and Production Tax Credit (PTC) for solar and wind energy or indicated potential tariffs and trade restrictions, on which the renewable energy sector is entirely reliant, especially solar panel imports from China, and hence could face higher costs due to trade tariffs or geopolitical tensions.
However, Tesla is an excellent example of a company with a sustainable narrative that those policies and expectations have not influenced. As discussed, the reason for this is different from the sustainable strategy approach by Tesla but rather the beneficial approach created by the friendly relations between Tesla CEO Elon Musk and newly elected President Donald Trump. As it has happened many times before, this is likely another scenario where the value of Tesla’s stocks is not bound to its performance or efficient management but rather to the actions of its CEO outside of the market. Hence, in addition to financial or analytical analysis, closely evaluating the CEO action is crucial in predicting a company stock forecast. References:
“Tesla and US bank stocks jump in post-election trades as renewables slump” Financial Times, 6 Nov. 2024
“Trump Taps Elon Musk and Vivek Ramaswamy to Slash Government” The New York Times, 12 Nov. 2024
“Elon Musk Now $50 Billion Richer Post-Election As Tesla Stock Up Another 9%” Forbes, 11 Nov. 2024
Alim, Arjun Neil, and Ray Douglas. “Tesla’s share of US EV sales falls below 50% for the first time.” Financial Times, 11 July 2024, www.ft.com/content/12483ddd-245c-4ddd-b605-224720aa30c7.
Bushey, Claire. “Donald Trump’s shake-up of EV rules would be ‘huge positive’ for Tesla.” Financial Times, 14 Nov. 2024, www.ft.com/content/a8799b8e-d84d-4a1b-bcea-31920ca7c94f.
“Tesla is not a car company but it does a good impersonation.” Financial Times, 24 Oct. 2024, www.ft.com/content/c6086aa2-23bf-4f6e-aaef-1156830b6264.
Gomes, Nathan, and Zaheer Kachwala. “Musk’s ties to Trump will reverberate through Tesla, other interests.” Reuters, 6 Nov. 2024, www.reuters.com/business/autos-transportation/tesla-pops-14-frankfurt-early-us-vote-results-lift-trump-trades-2024-11-06. Aug 27, Saralyn Cruickshank / Published, and 2021. “A Closer Look at the U.S. Economic Recovery and What Comes Next.” The Hub, 27 Aug. 2021, hub.jhu.edu/2021/08/27/economic-recovery-qa/.
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