Tesla’s stock (TSLA) has surged to a $1 trillion valuation – seemingly over the assumption that the Trump and Musk relationship is going to benefit the automaker.
The company is virtually worth more than the next 10 biggest automakers combined.
Tesla has extended its post-election rally another 7% this morning – resulting in its valuation surpassing $1 trillion for the first time in years.
The company has long been the most valuable automaker in the world, but it is now worth more than the next 10 biggest automakers combined:
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 Tesla CEO Elon Musk and President Elect Donald Trump.
What is Trump going to do for Tesla?
Tesla added over $200 billion to its valuation since the election. That’s a whole Toyota added to its valuation.
What does justify that? What can Trump do that will help Tesla that much?
It’s hard to tell exactly as what Trump says he will do and what he actually does aren’t always the same things, but there are a few theories.
The President Elect 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.
Finally, on the automotive manufacturing front, there’s also the more conspiratorial theory that Trump could carve out exceptions built especially for Tesla now that Musk has his ear.
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 Musk has hinted that he could build a federal framework to get self-driving systems approve at the federal level rather than state-by-state.
This would help Tesla more easily roll out when/if it solves self-driving.
Electrek’s Take
They have some good points about Tesla being more competitive than other EV automakers in a harsher cost environment.
Tesla has already proved it during the supply chain crisis amid the pandemic.
My problem with it is that it’s not good for electric vehicles. It’s only good for Tesla. At Electrek, we are for the acceleration of EV adoption in order to help ensure the transportation and energy industries are on an accelerated path to sustainability.
Tesla used to be for that too.
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.
That’s a real possibilities, but it would be bad for the mission to accelerate electric transportation.
It goes against Tesla’s original mission, which was to accelerate the entire industry’s transition.
In a way, it feels like Tesla was early and took advantage of the incentives and as other companies are trying to catch up, Tesla, or rather Musk, aims to close the door behind them. This goes against the original mission.
If that’s really what is going on, Tesla is not mission driven anymore. It has become all about the stock.
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Jack Dorsey, co-founder of Twitter Inc., speaks during the Bitcoin 2021 conference in Miami, Florida, U.S., on Friday, June 4, 2021.
Eva Marie Uzcategui | Bloomberg | Getty Images
During the crypto-crazed summer of 2021, when memecoins such as dogecoin and Shiba Inu were rocketing alongside bitcoin and ethereum, Square founder Jack Dorsey announced that his payments company was starting a new business unit, with the goal of “making it easy to create non-custodial, permissionless, and decentralized financial services.”
“Our primary focus is #Bitcoin,” Dorsey proclaimed on Twitter. The name of the business unit would be TBD.
In December of that year, Dorsey went a step further, changing the name of Square Inc. to Block, a reference, he said, to a number of things, including blockchain, the technology underpinning bitcoin. The Square Crypto business became known as Spiral.
Three years later, Dorsey is in retreat.
On Block‘s third-quarter earnings call Thursday, CFO Amrita Ahuja said Block has “made some recent decisions with respect to some of our emerging initiatives” and is “winding down our TBD efforts.”
Block continues to own a hefty amount of bitcoin on its balance sheet, with the current value of its holdings swelling to $630 million. And the company said it will be investing in a bitcoin mining initiative as well as Bitkey, its bitcoin wallet, while continuing to allow users to buy bitcoin through Cash App.
It’s a notable change of tune.
TBD was designed to be Block’s platform for developers. Block called it Web5 and said the mission was to create a more decentralized, secure and private internet. Dorsey said in a tweet in mid-2022 that Web5 “will likely be our most important contribution to the internet.”
Square’s five-year stock chart
But Wall Street’s view on crypto was starting to sour dramatically. With inflation soaring in 2022 and interest rates on the rise, shareholders demanded quicker returns on their investments. After peaking in 2021, Block shares lost more than 80% of their value before bottoming in October 2023.
Block said in late 2023 that it would cut its head count — then about 13,000 staffers — by as much as 1,000 by the end of 2024. Block laid off the majority of TBD employees in recent weeks. And in the third-quarter shareholder letter, Block said it was “scaling back” its investment in Tidal, the music-streaming service founded by Jay-Z, after spending about $300 million on a majority stake in the business in 2021. Tidal was part of TBD.
Dorsey was asked by an analyst on Thursday’s call about the company’s current bitcoin strategy.
“What we’re focused on in terms of our strategy overall on bitcoin is making it more accessible, making sure that more people can access bitcoin, buy, sell it, obviously, but also send it peer-to-peer,” Dorsey said.
Dorsey added that he wants “the internet to have a native currency,” because that would allow Block to move money faster and offer Cash App and other products in more markets.
A Block spokesperson reiterated the company’s public statement and pointed to Dorsey’s comments from the earnings call.
What’s become clear is that Dorsey can only do so much with crypto while trying to appease a more discerning Wall Street. Shares of Block were down about 1% at market close Friday, after the company reported revenue that trailed estimates and issued weaker gross profit guidance than some analysts were expecting.
In his 1,400-word letter to shareholders, Dorsey focused entirely on the company’s lending offerings for small businesses. A significant chunk of that is the buy now, pay later product from Afterpay, which Block acquired for $29 billion in 2021.
A “UK-first” intercity battery trial train proved that single battery technology can outperform diesel engines cost-effectively.
Hitachi Rail, Angel Trains, and TransPennine Express just wrapped up the trial, which took place in the north of England. It proved that powerful batteries offer significant benefits for emissions, fuel savings, and air quality.
Hitachi has already rolled out passenger battery trains in Japan and Europe, like the Masaccio hybrid in Italy. The intercity battery trial train in the UK demonstrated that the 700 kW battery could push the train past 75 mph and power it for over 70 km. The battery matches the weight of a diesel engine and is installed in the same undercarriage space, ensuring no risk of track degradation and no impact on the passenger environment.
The battery trial train delivered better-than-expected results in fuel savings, cutting fuel costs by 35-50%. One key way it achieved this was with an “Eco-mode” where the battery fully powered sections of the route, showing that the technology is more than ready for real-world use.
This success gives Hitachi the green light to move on to a full intercity battery-electric train, with an estimated range of 100-150 km. That would allow significant stretches of non-electrified routes to go battery-powered, avoiding the need for expensive infrastructure like overhead wires in tunnels or stations.
UK Rail Minister Lord Hendy said:
Rail is already the most environmentally friendly form of public transport, and the success of this trial will pave the way for even greener, more reliable journeys for millions of passengers.
This technology will play a vital role as we deliver our ambitious plans to transform and decarbonize the railways, and it could open the door to a more affordable expansion of the network for communities across the country.
Hitachi Rail is the only train manufacturer developing a battery product using the UK battery supply chain, and it’s collaborating with Innovate UK and the University of Birmingham to develop next-gen battery technology.
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In the Electrek Podcast, we discuss the most popular news in the world of sustainable transport and energy. In this week’s episode, we discuss how Trump’s victory will impact the EV market, TSLA surging, the new Ioniq 5 being a great deal, and more.
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