Investors are buzzing after Tesla's (NASDAQ:TSLA) stock soared by over 13% Wednesday morning, thanks to the surprising re-election of Donald Trump and his strong support for Elon Musk. Musk, who made a hefty investment in Trump's campaign and rallied for him in key states, now enjoys a direct line to the White House. With Trump hinting at a possible government role for Musk, the markets are reacting positively, anticipating regulatory shifts that could significantly boost Tesla's growthespecially in the realm of autonomous driving. But while this partnership promises exciting opportunities, it also brings a mix of risks that investors need to keep an eye on.

One of the most promising prospects for Tesla is the potential for a streamlined regulatory environment under Trump's administration. This could pave the way for a national standard on self-driving technology, which has long been a goal for Tesla. Analysts are optimistic that Trump's policies might favor Tesla's autonomous initiatives and could alleviate scrutiny surrounding the company's existing driver-assistance features. However, the looming threat of reduced EV tax credits and subsidies could present challenges for Tesla, even as Musk asserts that a less supportive government landscape might only serve to strengthen his position against legacy automakers.

On the flip side, the global landscape poses significant hurdles. Trump's hardline approach toward China could reignite trade tensions, jeopardizing Tesla's Shanghai factory, a vital hub for its global sales. Such a trade war could disrupt Tesla's supply chain and limit access to one of its largest markets. Moreover, if Musk takes on a role in Trump's efficiency initiatives, it raises concerns about his attention being dividedsomething Tesla investors are understandably wary of, especially as competition in the EV market heats up.

This article first appeared on GuruFocus.