Direxion Daily TSLA Bull 2X Shares (TSLL) surged 5.01% on Tuesday, reflecting growing optimism surrounding Tesla and the broader automotive sector. The significant uptick comes as investors anticipate potential changes to President Donald Trump's auto tariff policies, which could particularly benefit Tesla.

The expected modifications to the tariff structure are seen as a positive development for automakers, especially Tesla. While Tesla doesn't import cars to the U.S., it faces tariffs on imported parts. The proposed changes could include a credit worth 3.75% of a car's value, potentially mitigating a significant portion of the parts tariffs affecting Tesla. This move is expected to help preserve cash for reinvestment in U.S. operations and give companies time to adjust their supply chains.

Beyond the tariff news, TSLL's surge also reflects Tesla's recent strong performance in the stock market. Tesla shares have gained for five consecutive days, rising almost 20% since reporting its first-quarter earnings. Despite relatively disappointing Q1 results, investors seem to be focusing on future prospects, including CEO Elon Musk's increased attention to Tesla, potential launch of a lower-priced model, and the company's ambitious AI initiatives. These include plans for an AI-trained driverless taxi service in Austin, Texas, and the production of AI-trained robots.