U.S. election: Tesla and the EV sector are on watch for volatility this week

The electric vehicle sector could see some swings this week as investors weigh the impact of the results of the U.S. election.

Wedbush Securities thinks a win by Donald Trump would be an overall negative for the electric vehicle industry, due to the likelihood that EV rebates/tax incentives get pulled. However, the Trump scenario for Tesla (NASDAQ:TSLA) is more complicated.

Ives noted that Tesla (TSLA) has the scale and scope that is unmatched in the EV industry, which could give the Austin-based company a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players such as BYD Company (OTCPK:BYDDF) and Nio (NIO) from entering the U.S. market. Notably, Tesla (TSLA) could also benefit from an accelerated timeline for its autonomous and FSD initiatives.

On the negative side for Tesla (TSLA), there could be implications over the next year with consumer demand if Trump and Musk are tied even closer together, per Ives. There is also a threat that an escalated trade and tariff war will hurt Tesla’s (TSLA) sales in China, or be an overhang on the stock.

If Kamala Harris wins the election, Wedbush Securities expects the EV tax credits to remain the same, before ultimately increasing at some point in 2025. Detroit auto giants General Motors (GM), Ford Motor (F), and Stellantis (STLA) are seen benefiting, while the Harris scenario is seen as having a neutral/slight negative impact for Tesla (TSLA).

The Harris and Trump scenarios will also be dependent on which party controls the Senate and House of Representatives.