### Trump’s Plan to Cut EV Tax Credit Could Bolster Tesla Amidst Auto Industry Shake-Up

President-elect Donald Trump’s anticipated decision to eliminate the electric vehicle (EV) tax credit might unexpectedly benefit Tesla and its CEO, Elon Musk, according to analysts from investment firm Wedbush. Although the potential move could spell trouble for traditional automakers, it might end up reinforcing Tesla’s market position.

Reuters reported that Trump’s transition team plans to dismantle the $7,500 consumer tax credit for EVs, citing anonymous sources familiar with the matter. Surprisingly, Tesla appears to support this proposed change. Analysts led by longtime Tesla supporter Dan Ives suggest that while the loss of the tax credit could marginally impact Tesla’s demand in the U.S., the company’s unparalleled scale and scope would allow it to withstand the change better than its competitors.

During Tesla's second-quarter earnings call in July, Musk acknowledged that removing the EV tax credit might slightly affect Tesla. However, he noted that the removal would have a far more detrimental impact on competing automakers, ultimately benefiting Tesla in the long run by stymying its rivals’ advancements.

Musk’s growing rapport with Trump could also play a crucial role in shaping the future administration’s EV policies in a way that favors Tesla. The Wedbush analysts maintain an OUTPERFORM rating on Tesla’s stock, with a price target of $400, and advise investors to buy rather than sell despite concerns about the tax credit elimination.

The analysts also argue that the absence of the tax credit could be offset by other measures that promote U.S.-manufactured EVs, aligning with Trump’s focus on revitalizing domestic manufacturing. Nonetheless, the removal of the tax credit would likely be a setback for other U.S. automakers such as Ford, GM, and startup Rivian, though perhaps not as severe as some might fear, especially for GM and Rivian.

Despite these potential hurdles, Cox Automotive executive analyst Erin Keating expressed confidence that the momentum towards electrification is unstoppable. Keating pointed out that EV sales were up 9% through the end of the third quarter, emphasizing that the broader shift towards electric vehicles will persist, driven by increased consumer choice and competitive pricing.

While the elimination of the EV tax credit could make electric vehicles a less attractive option in the short term, industry experts agree that the auto industry's transition to EVs is irreversible and will continue regardless of governmental incentives.