Tesla Stock Falls After Reversal of Pro-EV Policy
On Tuesday, Tesla (TSLA) shares declined over 3% during premarket trading, reversing earlier gains. The drop came after the revocation of an EV-friendly policy implemented by former President Biden during President Trump's first full day in office.
Trump signed an executive order eliminating 78 policies enacted by Biden, including a mandate requiring 50% of new US cars to be electric by 2030. Other EV stocks also faced losses: Lucid (LCID) fell 7%, Rivian by 5%. Conversely, General Motors (GM) and Ford (F) saw stock gains.
Trump's administration plans to review and potentially eliminate "unfair subsidies" and market distortions favoring EVs. The Biden administration had provided grants and tax credits through the Inflation Reduction Act, primarily to "red states," to promote electric vehicles and clean energy as a strategy to mitigate climate change.
Despite the stock dip on Tuesday, Tesla has experienced significant growth as part of the "Trump trade." The stock has risen over 60% since Trump's election victory in November. Tesla CEO Elon Musk believes his company may not be as affected by the policy reversal compared to competitors, suggesting it could even benefit Tesla long-term.