Shares of Tesla (TSLA -5.40%) are surging on Thursday. The electric-vehicle (EV) maker's stock gained 5.2% as of 11:40 a.m. ET and was up as much as 7.3% earlier in the day. The jump comes as the S&P 500 (^GSPC -4.84%) and Nasdaq Composite (^IXIC -5.97%) showed modest gains.
The EV leader is likely to be less impacted by President Donald Trump's new tariffs than the rest of the auto industry.
NASDAQ: TSLA
Key Data Points
Tesla builds its cars domestically
Trump levied new tariffs on Wednesday. All foreign-made vehicles and foreign auto parts will receive a 25% tariff. Stocks of American automakers with significant foreign manufacturing slid on the news.
Tesla primarily manufactures its vehicles in the United States at factories in Texas and California, making it less vulnerable to the wide-ranging levies that affect global shipments of cars and car parts. Trump highlighted Tesla's position, saying the new tariffs "could be net neutral or even good for Tesla." He added that his close ally and Tesla CEO Elon Musk did not advise him regarding the auto tariffs.
Tesla is struggling
Although it appears Tesla will avoid most of the pain from these tariffs, it's in a precarious position at the moment. Elon Musk's involvement in politics at home and abroad, increased competition from Chinese EV rivals like BYD, and changing regulatory environments have created significant headwinds for the company. As a result, Tesla has seen its sales plummet across global markets.
Much of the company's current valuation -- even after the stock's precipitous drop over the last few months -- comes from a vision of the future that, despite Musk's insistence, is far from guaranteed. I would avoid the stock at this price.
