NEW YORK – Shares of Tesla rose sharply on Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump's return to the White House.

Under a Trump administration, Tesla is expected to make significant profits, with the threat of reduced subsidies for alternative energy and electric vehicles hurting smaller competitors the most. Trump's plans for extensive tariffs on Chinese imports make it less likely that Chinese electric vehicles will be sold in large quantities in the United States any time soon.

“Tesla has unprecedented scale and scope,” Wedbush analyst Dan Ives said in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in an environment without EV subsidies, coupled with likely higher tariffs in China that would continue to squeeze out cheaper Chinese EV suppliers.”

Tesla shares rose more than 14% on Wednesday, while shares of rival electric vehicle makers slumped. Shanghai-based Nio fell 5%. Shares of electric truck maker Rivian fell 9% and shares of Lucid Group fell nearly 8%.

According to the Energy Information Administration, Tesla dominates electric vehicle sales in the U.S. with a 48.9% market share by mid-2024.

Clean energy subsidies are part of the Inflation Reduction Act signed into law by President Joe Biden in 2022. It included tax credits for manufacturing and tax credits for electric vehicle consumers.

Musk was one of Trump's biggest donors, spending at least $119 million to mobilize Trump's supporters to support the Republican candidate. He also promised to donate $1 million a day to voters who sign a petition for his political action committee.

In some ways, it was a difficult year for Tesla, as sales and profits fell in the first half of the year. Profit actually rose 17.3% in the third quarter.

The U.S. launched an investigation into the company's “Full Self-Driving” system after reports of accidents in low visibility conditions, including one that killed a pedestrian. The study covers around 2.4 million Teslas from model years 2016 to 2024.

And investors sent the company's shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio on Thursday night. Tesla hasn't seen much progress in autonomous vehicles, while other companies have made notable progress.

Tesla began selling the software called “Full Self-Driving” nine years ago. However, there are doubts about its reliability.

After rising over the last two days, the stock now has a year-to-date gain of 16%.