How could Elon Musk's relationship with Donald Trump sway Tesla's fortunes?

Electric vehicle manufacturer Tesla is set to announce its first quarterly earnings since the US Presidential Election in November, with eyes on the early impact of owner Elon Musk’s close relationship with Donald Trump.

The result meant an initial spike in Tesla’s share price, despite stalling sales, as investors sought to profit from Musk’s influence in the race, and it is thought that the announcement of its latest earnings will give an indication of its future direction of travel.

ManMohan Sodhi, Professor of Operations and Supply Chain Management at Bayes Business School, said the outlook was perhaps brighter for Musk himself than for Tesla overall.

“Donald Trump’s victory inevitably provided a major boost to Tesla’s share price, regardless of any impact on sales,” Professor Sodhi said.

“While there is obvious friction between the MAGA camp and Musk, his personal relationship and access to the new President will benefit both himself and Tesla in the United States.

“However, Trump’s lack of interest in EVs, coupled with poor recent sales through lack of demand and organised global boycotts, means the picture is far from perfect.

“For instance, Tesla sales may not receive as much of a boost as other Musk companies like SpaceX, as he uses his contacts to muscle out Bezos’ Blue Origin or the hapless Boeing.

With global competitors like BYD continuing to innovate and expand, it is likely that Tesla’s global market share will take a hit, even if its US share increases through imposed tariffs on overseas goods – and rival manufacturers.

“Across Europe, the link between Musk and Trump is already seeing negative consequences for Tesla. Consumers are growing increasingly indignant following recent announcements on Columbia, Greenland, the Panama Canal, the Gulf of Mexico and Gaza.

In Asia, Chinese automakers are already providing better bang for consumers’ buck and will almost certainly make inroads in market share. This is likely to be amplified as they wake up to the reality of Trump 2.0 and his early rhetoric around the region. The same is true of South America.

“In summary, Musk and his other companies will have benefited greatly so far from his relationship with Trump, and Tesla’s stock price may also be on the up, but in the medium term its unit sales face a downturn.”

All quotes can be attributed to ManMohan Sodhi, Professor of Operations and Supply Chain Management at Bayes Business School.