Elon Musk empire to boom after Donald Trump White House appointment

Billionaire Elon Musk’s White House appointment is set tosend Tesla and his other ventures soaring but investors have been issued a stark warning.

Tesla shareholders are riding a rising wave of success off the back of Donald Trump officially naming Elon Musk in his new administration following last week’s landmark US election win.

The simple idea last week of Tesla boss Musk joining Trump’s administration in an official capacity saw Tesla stock rise by nearly 15 per cent and the company’s market value exceed $1 trillion USD.

Now that vision is a reality and Tesla is booming.

The electric giant quickly became the most active traded stock as investors moved to predict a positive rippled effect from the Trump-Musk relationship on his Musk’s business.

Trump has placed Musk in a government role to lead efforts in cutting unnecessary government costs.

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Donald Trump has made Elon Musk part of his new administration. Picture: AFP

With Musk at the table, speculation is rife that Tesla will enjoy more favourable policies.

But it’s not just Tesla that will soar, with Stake market analyst Samy Siriam saying it’s possible Musk’s other companies will “reap the benefits” of lighter regulation in other domains.

“SpaceX, for instance, could gain an edge over its aerospace competitors like Boeing ($BA) with a larger number of government contracts,” she said.

The direct impact for Tesla stock is clear: With Musk now positioned to influence government spending, investors are betting on advantages for Tesla from increased government contracts to policies that could limit foreign electric vehicle (EV) makers.

MORE: Why Trump’s comeback could hurt EVs

Tesla is a $1 trillion company once again after share prices surged.

Siriam points out while Tesla will benefit in the short term, the long-term remains unclear.

As Sriram explains, the company relies heavily on China for both manufacturing and sales which will be problematic if Trump increases tariffs.

“China is the firm’s biggest market outside the US,” she said.

Tesla’s Shanghai Gigafactory produces more than one million Tesla’s annually.

The factory is a vital hub with Chinese sales compromising 39 per cent of the company’s global deliveries in Q3.

If tensions rise with China, this could disrupt Tesla’s supply chain and lead to increased costs for US operations.

Elon Musk’s companies look set to benefit from his new role. Picture: AFP

Trump has also been vocal about cutting EV subsidies domestically, which could negatively impact Tesla’s sales in the US.

In the meantime, Tesla customers continue to ride the wave which saw the EV giant’s market capitalisation broke through the trillion dollar barrier for the first time in two years.

Tesla’s $US 1 trillion valuation puts it far ahead of the combined values of traditional automotive brands such as Ford ($US43.6b, $66.2b), General Motors ($US61.12b, $92.9b), VW (€46.2b, $75.2b) and Toyota (¥42.05t, $418b).

Originally published as Elon Musk empire to boom after Donald Trump White House appointment