Wedbush analyst Dan Ives released a new research note on Thursday defending that Elon Musk’s exit from his U.S. government role is like “music to the ears of Tesla shareholders.”
The analyst maintained the Outperform rating on the stock, along with the $500 price target set last week, as the brand prepares to start providing the first driverless rides in the United States.
The price target implies an upside potential of 40.1% on the company’s shares, based on Wednesday’s close at $356.90.
The stock reached a new 3-month high on early Thursday at $368. The surge came shortly after Musk confirmed that his term as head of the U.S. Departament of Government Efficiency (DOGE) will conclude on Friday, May 30.
Trump’s adviser is leaving at the end of the 130-day limit for Special Government Employees.
According to the analyst, this is a “clear positive step” with “Musk now laser focused on Tesla and the autonomous vision ahead.”
Ives noted that “Musk has been critical of Trump’s spending bill and tariffs,” which was “no surprise” to Wedbush.
Trump’s “big, beautiful bill,” in which he plans to cut on tax credits for clean energy, was approved on the U.S. House of Representatives last week.
Tesla urged the Senate, which will now vote on the bill, to commit to a “sensible wind down” on these cuts, as they could “threaten America’s energy independence.”
Earlier this week, in an interview with CBS News, Musk said he was “disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing.”
In April, Donald Trump introduced a reciprocal tariff plan targeting imports from several countries and moved forward with a previously announced 25% tariff on imported vehicles and auto parts.
By then, Elon Musk said that, ideally, “both Europe and the United States should move (…) to a zero tariff situation,” a comment that drew criticism from President Trump’s top trade adviser, Peter Navarro.
In the note, the Wedbush analyst did not ignore “the elephant in the room,” admitting that “2025 started off as a dark chapter for Musk and Tesla” due to the CEO’s role in DOGE, “which created brand damage and a black cloud over the story.”
The U.S. EV maker’s first-quarter deliveries fell short of Wall Street expectations, with sales dropping significantly across Europe. The decline was partly due to increased competition and the Model Y SUV refresh.
However, it was also attributed to protests against the brand, driven by CEO Elon Musk’s political involvement in both the U.S. and Europe.
“There is still some wood to chop to turn around Model Y growth in China and Europe,” Ives noted, as the automaker struggles to recover sales figures in both continents.
The analyst stated that the firm believes “the golden age of autonomous is now” and “on the doorstep for Tesla, with the Austin launch on June 12th kicking off this key next chapter of growth.”
According to Ives, the “core focus for investors” in Tesla is AI, as it “remains the most undervalued AI play in the market today.”
In the firm’s view, the company will be “one of the best pure plays on AI over the next decade along with Nvidia, Microsoft, OpenAI, Palantir, Amazon, Meta, and Alphabet.”
Wedbush estimates that “the AI and autonomous opportunity is worth at least $1 trillion alone for Tesla,” as the “federal regulatory spiderweb” that the company faced with the Full Self-Driving (FSD) “clears significantly under Trump.”
For Ives, “Tesla could reach a $2 trillion market cap by the end of 2026 in a bull case scenario,” with the “march” towards valuation “over the next 12 to 18 months” beginning with FSD and “the acceleration of Cybercab in the U.S.”
“Tesla has the opportunity to own the autonomous market and, down the road, license its technology to other auto players both in the U.S. and around the globe,” the analyst stated.
As of the time of writing, Tesla‘s shares are trading nearly 2% higher at $363.80 on Thursday’s market session. The company’s stock more than doubled in the past twelve months.
