It’s no secret President Trump and Elon Musk are buddies.

Here they are at this weekend’s UFC event:

Elon has been one of Trump’s staunchest supporters throughout his campaign. He donated $118 million to Trump’s reelection efforts.

And it looks like this support is now paying off.

The incoming Trump administration has just announced they’ll do Musk, and all Tesla (TSLA) investors, two big favors.

• Trump plans to repeal the $7,500 EV tax credit.

This credit is a crucial subsidy for EV makers. EVs are expensive. On average, a new one costs $56,000, vs. $48,000 for a new gas-powered car.

The $7,500 credit essentially covers the difference, and can be taken at the time of purchase. It has seriously accelerated the adoption of EV cars… and Trump wants to get rid of it.

I know what you’re thinking. How can the elimination of a generous EV subsidy be good for Tesla?

Because Tesla is the only EV company that can thrive without the tax credit.

GM only makes about $2,000 on each EV it sells. Toyota makes even less, just $1,200 per EV. And Ford loses $760 on every EV it rolls out of its factories.

Tesla, on the other hand, makes $9,500 per car.

Musk built huge state-of-the-art factories that keep production costs to a minimum. Here’s a snapshot from inside Tesla’s Gigafactory in Texas. It looks like something from the future:

What do you think will happen when the other car companies can no longer take advantage of the $7,500 subsidy?

They’ll either have to lower the price, putting their EV divisions deep in the red. Or sell far fewer EVs.

While this will disrupt the whole EV market, Telsa will be fine. But according to Elon Musk, it will be “devastating” for its competitors.

And the new administration plans to do Tesla another favor:

• Last week, Trump’s transition team said easing regulations for self-driving cars will be a top priority.

While everyone's fixated on current car sales, Tesla’s ambitions are bigger: to revolutionize transportation itself. Thanks to new AI upgrades, its full self-driving (FSD) technology is improving exponentially.

Until recently, all self-driving cars ran mostly on “human-coded rules.” Programmers told the car’s brain that when it sees a green light, it must drive. But it’s impossible to programmatically prepare for every real-life situation.

Tesla’s old autopilot had tens of thousands of these rules, which degraded performance. The latest v12.5 update eliminated all human code. It now runs 100% on an artificial intelligence (AI) system, like ChatGPT. Elon revealed that the v12.5 update made Tesla’s self-driving software 100X better since January, measured by how often humans must take over the wheel. And Musk’s estimate is the next v13 update will make it 1,000X better.

At this rate, expect Tesla’s self-driving mode to be safer than any human driver within 12 months.

• Coming soon: Tesla’s $25,000 robotaxi

Robotaxis are a trillion-dollar disruption nobody has fully grasped yet.

They will reshape cities… real estate values… where we live… work… and send our kids to school.

So far, regulators have held back Tesla’s self-driving ambitions. They’ve launched multiple probes into its FSD and Autopilot technology, and even forced it to recall 360,000 of its EVs at one point because of unsafe behavior.

We need smart regulations around self-driving cars, of course. But it’s only a matter of time until self-driving cars are much safer than the average human driver.

Robotaxis have literal electronic eyes in the back of their heads… never break the speed limit… never drink and drive… and never send a text message. They will save tens of thousands of lives each year.

Regulators are one of the main obstacles keeping robotaxis from going mainstream. That burden will ease under the Trump administration.

• Before the elections, I said Tesla will become the most valuable company in the world by 2030.

Tesla stock has already surged 36% since Election Day. And it’s up 90% since I first recommended TSLA stock to my Jolt readers back in June.

With the Trump administration at its back, I think TSLA could vault to the top even sooner.

It’s my top stock to own for the next five years.

If you want to hear more ideas like this every week, go here to join The Jolt. I write about the biggest disruptions and how to profit from them.

Stephen McBride

Chief Analyst, RiskHedge