Tesla’s stock (TSLA) experienced a significant rebound on Tuesday, recovering from its worst performance in five years. This positive shift followed CEO Elon Musk’s announcement that the company plans to double its production capacity in the United States.
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At a White House event, Musk stated, “As a function of the great policies of President Trump and his administration, and as an act of faith in America, Tesla is going to double vehicle output in the United States within the next two years.” President Trump also expressed his intention to purchase a Tesla electric vehicle, further bolstering the company’s image. Following the event, Tesla shares surged to session highs, closing with a 3.8% gain.
Trump’s Endorsement and Tariff Policies
President Trump praised Tesla as a “great company” and expressed hope that his purchase would stimulate Tesla EV sales. The White House has indicated that Trump’s tariff policies aim to encourage US manufacturing. These policies, which have fluctuated in intensity recently, seemingly influenced Honda’s reported decision to manufacture its next-generation Civic in the US, partially in response to tariff implications.
President Trump exits a Tesla Model S at the White House.
Morgan Stanley’s Bullish Outlook on Tesla
Adding to the positive momentum, Morgan Stanley analyst Adam Jonas issued a note to clients, recommending Tesla as a buying opportunity. Jonas attributed the recent 50% decline in Tesla’s stock price from its December 17th high to factors such as weak sales data, negative brand perception, and market degrossing. However, he views this pullback as a chance to invest in a company with significant long-term growth potential in the field of embodied AI.
Jonas highlighted the correlation between Tesla’s stock price and the narrative surrounding the company. Positive price movements often coincide with discussions of Tesla’s AI advancements and autonomous technology. Conversely, negative price trends tend to focus on sales declines, brand erosion, and concerns about Musk’s distractions.
Morgan Stanley maintains a “Top Pick” rating on Tesla stock with a $430 price target, anticipating a volatile year ahead with potential swings between their bear case ($200) and bull case ($800) scenarios. Key catalysts for potential upside include the unveiling of robotaxi testing in Austin, new federal regulations on autonomous vehicles, updates on Optimus robots, and various auto-related technological milestones.
President Trump and Elon Musk in a Tesla Model S at the White House.
Musk’s Controversial Role and Protests
President Trump recently weighed in on the Tesla situation, alleging that leftist agitators were orchestrating protests at Tesla showrooms and engaging in an “illegal and collusive” boycott of the company. Musk’s leadership of the White House’s controversial DOGE initiative has coincided with a decline in his public approval ratings, while protests at Tesla showrooms have intensified.
In addition to declining sales in Europe and China, Tesla faces negative sentiment from some US owners who are choosing to sell their vehicles. These challenges underscore the complex landscape Tesla is navigating, even amidst positive developments like the production expansion announcement and Morgan Stanley’s bullish outlook.
Conclusion: A Pivotal Moment for Tesla
Tesla’s recent stock rebound, driven by Musk’s production expansion announcement and a positive analyst outlook, offers a glimmer of hope amidst a challenging period. The company’s future hinges on navigating a complex web of factors, including geopolitical tensions, fluctuating consumer sentiment, and the successful execution of its ambitious technological roadmap. This confluence of events marks a pivotal moment for Tesla, with the potential for significant growth or further decline in the coming year.
