Tesla hits $1 trillion market cap as shares rebound following Trump's election victory

Shares of Tesla climbed more than 6% in mid-morning trading on Friday, pushing the electric vehicle maker's market capitalization above $1 trillion.

The company's shares have risen about 27% this week after Donald Trump won the US presidential election and investors grew optimistic that the former leader's return to the White House could benefit Tesla. Tesla CEO Elon Musk was a key Trump ally throughout his campaign, investing at least $130 million in a pro-Trump campaign.

Tesla had a market capitalization of $807.1 billion as of Tuesday's close. Before this week's rally, shares of the automaker were up about 1% for the year. Tesla shares are up about 27% since the start of the year.

Tesla is rejoining a growing club of tech names now worth more than $1 trillion Nvidia, Apple, Microsoft, alphabet, Amazon And Meta (although all but Meta are worth more than $2 trillion). Tesla's market capitalization first exceeded $1 trillion in October 2021.

Wedbush Securities analyst Dan Ives said a potential Trump administration could mean less regulation for Tesla and other companies.

“Tesla has the scale and scope unparalleled in the electric vehicle industry, and this dynamic could give Musk and Tesla a clear competitive advantage in an environment without electric vehicle subsidies, coupled with likely higher tariffs in China that would continue to squeeze out cheaper Chinese electric vehicle suppliers. “(BYD, Nio, etc.) from flooding the U.S. market in the coming years,” Ives wrote in a note to clients this week.

Trump has previously said he could cut the $7,500 federal electric vehicle tax credit. These loans have helped boost sales of Tesla vehicles in the past.

In its most recent earnings update, Tesla reported third-quarter revenue of $25.18 billion and net income of $2.17 billion.

CEO Musk said on the earnings call that his “best guess” is that “vehicle growth” will reach 20% to 30% next year due to “lower-cost vehicles” and the “emergence of autonomy.”

Tesla has been promising and developing driverless vehicle technology for more than a decade. Its main US competitor, Alphabet-owned Waymo, is ahead and already operates commercial robotaxi services in several major cities.

On the third-quarter call, Musk said he would use his influence with the Trump-Vance administration to establish a “federal approval process for autonomous vehicles.” Approvals are currently taking place at the state level, which the CEO sees as a regulatory hurdle that Tesla will have to overcome once the company finally offers more than just partially automated driving systems.

—CNBC's Lora Kolodny contributed to this report.

Correction: This story has been updated to correct the year Tesla's market cap surpassed $1 trillion for the first time.