Tesla stock rose again Tuesday after thawing U.S.-Chinese trade relations gave the shares a big boost on Monday.
Elon Musk, meanwhile, was one of many executives on hand for President Donald Trump’s visit to Saudi Arabia.
Tesla stock added 4.9%, closing at $334.07, while the S&P 500 gained 0.7% and the Dow Jones Industrial Average fell 0.6%.
Tesla shares rose 6.7% to start the week, closing at $318.38, giving the auto maker a market capitalization north of $1 trillion, as Chinese and U.S. officials announced a 90-day pause on steep import tariffs following talks in Switzerland over the weekend. Tariffs on Chinese and U.S. imports were north of 100% before the pause.
Tesla stock rose despite Chinese EV sales dropping almost 9% year over year in April. Things haven’t improved in May. Tesla’s Chinese sales are down 56% year over year, according to data tracked by Citi analyst Jeff Chung.
The falling sales are one reason Tesla investors are happy with the improvement in trade relations. Cantor Fitzgerald analyst Andres Sheppard noted that Chinese consumers have avoided American products as the U.S.-China trade war escalated.
With trade tensions easing, investors can turn their attention back to the U.S. On Monday evening, the House Ways and Means Committee published a markup of a bill intended to be part of Trump’s package of tax legislation, which is intended to cut tax rates, among other things.
That markup would see EV purchase tax credits eliminated by the end of 2025. That is bad for EV buyers, who qualify for up to a $7,500 tax deduction. The markup, however, also included a provision to deduct auto-loan interest from taxable income as long as the car is manufactured in America. Tesla makes all the cars it sells in the U.S. domestically.
For overall EV affordability, losing the EV credit is worse than getting tax-deductibility of auto loan interest, but both things were widely expected.
Musk was also on hand in Saudi Arabia, where the White House announced a $600 billion investment from the Middle East kingdom. The country is holding an investment forum focused on AI. Whenever the focus is on artificial-intelligence, it’s good news for Tesla stock.
