Financial markets caught fire the day after Republican Donald Trump’s victory, a signal investors think the next president will be good for business.

The Dow Jones Industrial Average rocketed 1,508 points higher in Wednesday trading as other indices also notched big gains. Tesla Inc. shares surged as much as 15% as investors wager the electric vehicle maker run by Elon Musk will be a major beneficiary of Trump’s return to the White House. But the election result's impact on the shares of other automakers, including the Detroit Three, proved less dramatic.

Ford Motor Co.'s share price closed up 5.5%, with General Motors Co. climbing 2.5% on the day, and Stellantis NV stock — which has been hampered by the automaker's slow U.S. sales and inventory pileup this year — rose only slightly. German automaker stocks were lower, including BMW AG and Mercedes-Benz Group AG, amid disappointing quarterly earnings and concerns over Trump’s threats to hike tariffs on imported cars.

Stocks overall rallied Wednesday on the Trump election news. The bellwether S&P 500 rose more than 2.5% by the end of trading; the Dow Jones Industrial Average jumped roughly 3.5%; and the tech-heavy Nasdaq surged by nearly 3%.

In the waning days of the campaign, Tesla CEO Musk emerged as arguably the most prominent supporter of Republicans this election cycle, backing them with more than $130 million in spending and relentless messaging on X, his social media network formerly known as Twitter.

Still, Trump criticized electric vehicles throughout his campaign, for example, telling a Detroit audience of business leaders that a push toward more EVs was "demented" while pledging that the "gasoline engine will be here for a long time" under a Trump presidency. And Trump used a campaign stop in Flint to urge the Detroit-based industry to leave the EV business to Chinese rivals. Yet the once-and-future president softened his tone on EVs somewhat after Musk’s endorsement.

“Let me tell you, we have a new star, a star is born: Elon,” Trump said during an address to supporters at his election watch party in West Palm Beach, Florida, early Wednesday morning. He spoke about Musk for almost four minutes, praising his company SpaceX and calling him a “special guy” and “super genius.” Tesla shares traded at a multi-month high.

Trump’s opponent, Vice President Kamala Harris, likely would have maintained policies supporting the U.S. production and sales of EVs, including the Inflation Reduction Act that President Joe Biden signed into law two years ago. But Musk had already soured on Biden before then, in large part due to the Democrat’s embrace of unions and failure to credit Tesla for leading the EV transition.

Multiple EV-related provisions could now be targets for repeal — especially if Republicans take both houses of Congress, BloombergNEF analysts warned last week. However, fuel economy and emissions requirements are also likely to undergo rewrites, as they did during Trump’s first term. And that could limit the revenue Tesla generates from selling regulatory credits to manufacturers struggling to comply with Biden’s tougher rules.

The Detroit Three are all developing and releasing EVs, spurred on by the up-to $7,500 federal tax credits on offer, and those electrification growth efforts would surely be hampered if the incentives were pulled. Yet all three still do big business in SUVs and pickups with internal combustion engines, and being able to sell those profitable vehicles for longer under a Trump administration that is more lax on emissions requirements would likely help them more easily make the EV transition.

"We see (Ford and GM) as the main beneficiaries from the Trump administration," said a note from BofA Securities analyst John Murphy. "The current environmental regime would pressure the core business of legacy (automakers that build trucks) to decarbonize by the end of the decade while shifting quickly to an EV portfolio. Softer regulation will benefit volumes of their very profitable trucks. We see some risks from higher tariffs on Mexico imports for (Ford and GM) given their exposure to the region, both direct and indirect."

Meanwhile, Murphy wrote that EV automakers not named Tesla — including Rivian Automotive Inc. and Lucid Motors — will be "challenged" under Trump potentially due to slower demand because of less pressure to move toward electric powertrains.

Potential tax incentive cuts under Trump would be an "overall negative" for the EV industry, Daniel Ives, a Wedbush Securities analyst, wrote in a note to clients. But Tesla has the scale and scope to keep selling while also benefitting from Trump's promises to up tariffs on Chinese EVs that will help protect the market for the domestic automaker. Those tariffs could backfire, though, if they created a trade war with Beijing and hampered Tesla's ability to sell in China.

In addition, the Wedbush report noted, Trump could help accelerate autonomous vehicle development for Tesla, and competitor Waymo, which investors see as crucial to the company's growth.

Still, there could be downsides for Tesla and its CEO's backing of Trump, including on the consumer demand side in the United States, Ives noted. The reason: potential customers uncomfortable with Musk's ties to Trump, possibly could move away from the EV maker "when buying decisions ultimately come around over the next year."

Jessica Caldwell, Edmunds' head of insights, said in an emailed statement that it's possible Musk could use his influence with Trump to continue to help the EV industry overall, including possibly with a new set of incentives.

"From the beginning, Musk has made it clear that he wants to see the EV market succeed beyond Tesla, so it’s possible he may try to influence a new incentive structure that continues to support broader EV adoption in the U.S.," Caldwell said. "These policies will not likely change overnight, but consumers who were planning on taking advantage of EV tax credits and reduced costs might consider moving up their purchases a bit sooner."

Financial company CFRA Research on Wednesday raised its opinion on Tesla stock to "buy" from "hold," with analyst Garrett Nelson noting that Tesla and Musk were "perhaps the biggest winners from the election result," and that could mean faster approval for the company's autonomous driving technology. He agreed that potentially cutting EV tax credits under Trump would benefit Tesla as "the only profitable manufacturer of EVs."

Musk himself has downplayed the threat of any pullback in government incentives for EVs, emphasizing the potential for companies to benefit from deregulation. During Tesla’s quarterly earnings call last month, he called for a federal approval process for autonomous vehicles and said he would “try to make that happen” if tapped for a role in Trump’s administration.

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