• Tesla shares rose 12% in premarket trading after Trump’s election victory.
• Elon Musk is an outspoken supporter of Trump and has campaigned for him for months.
• Musk’s big bet on Trump has boosted analysts’ confidence in Tesla’s future prospects.

Elon Musk’s big bet on Donald Trump is already paying off for Tesla.

EV shares rose 12% in premarket trading and are poised to open at their highest level in more than a year following the election results.

Fox News mentioned the presidential race for Trump early Wednesday morning. Just under four hours later, projections come true CNN and other news organizations gave Trump the 270 Electoral College votes needed to win the presidency.

Wedbush Securities analyst Dan Ives called Trump’s victory a “home run for Tesla.”

“Elon Musk’s status as a Trump ally in the business community has not gone unnoticed by investors who increased shares in Tesla by 3% in pre-market trading on the election news,” he said.

Musk was an outspoken supporter of Trump during the elections. The billionaire has been campaigning for the newly elected president in recent months, even joining him on stage at a campaign rally in Butler, Pennsylvania.

In his victory speech early Wednesday, Trump paid tribute to Musk’s efforts, calling him a “super genius” and a “new star.”

Gene Munster, the managing partner at Deepwater Asset Management, said Tesla’s stock surge was based on an emotional response from investors and their confidence in the EV company’s CEO.

“That emotion is that Elon made a big gamble and was right. This gives investors confidence that his next big gamble has a greater potential to succeed,” Munster said in a post on X on Wednesday.

Trump’s victory is “generally negative” for the EV industry

Despite the surge in Tesla shares, Trump’s victory could be bad news for the broader EV market.

Ives said the Trump presidency could be “generally negative” for the EV industry, citing the possibility that the Trump administration could withdraw tax breaks and rebates for manufacturers.

However, Ives said it could be a “huge positive” for Tesla due to the company’s scale and market position.

“Tesla has the scale and scope unparalleled in the EV industry and this dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled with likely higher Chinese tariffs that would continue to drive out cheaper Chinese EV players . (BYD, Nioetc.) so as not to flood the US market in the coming years,” Ives said in a note.

Tesla faces stiff competition in China, with rivals launching their own electric vehicles at lower prices.

China-based BYD is Tesla’s main competitor in the region and took over the title of world’s best seller of electric cars from Musk’s company early this year.

Earlier this month, BYD scored another win when its quarterly sales exceeded Tesla’s for the first time.

BYD posted revenue of 201.1 billion yuan ($28.2 billion) in the three months to September 30, up 24% from the same quarter last year. Tesla posted sales of $25.2 billion over the same period.

Tesla representatives did not immediately respond to a request for comment from Business Insider, which was made outside of normal business hours.