Tesla (TSLA) close to all-time high on EV tax credit talk

Tesla’s stock (TSLA) is rising and getting close to its all-time high today after some news came out this weekend, including new hope for revamping the electric vehicle federal tax credit.

After the markets opened today, Tesla’s price per share increased by as much as 5% to $376 – close to its all-time high closing price of $383 per share.

While there several different factors affecting the stock price, renewed hope of Tesla buyers having access to a federal tax credit again is likely one of the most important ones.

As we reported yesterday, the US Congress is considering an EV tax credit revamp that would help Tesla, GM, and used EV buyers.

Tesla and GM have become the first two automakers to hit the 200,000 delivery threshold to trigger the phase-out of their EV buyers’ access to federal tax credits.

It’s creating an advantage for Audi, BMW, Ford, and others basically for being late in launching electric vehicles in the US.

The new proposed reform would add an additional 400,000 vehicles with $7,000 in federal tax credit after an automaker hits the initial threshold.

The reformed tax credit is being pushed by Congressman Mike Thompson (D-CA) and is part of a wider bill called the “Growing Renewable Energy and Efficiency Now Act of 2019” or “GREEN Act of 2019”.

At this point, the odds of the bill making it through the legislature is unclear.

Last year, Tesla’s stock also got a bump at the end of the year based on talks of reforming the electric vehicle tax credit as it was starting to phase out for the automaker, but nothing came of it.

Chart provided by TradingView

Electrek’s Take

Let’s not count our chickens before they hatch.

While I agree that this bill going through would have a massive impact on Tesla, we are still talking about the US legislature, which is extremely divided on these kinds of issues, passing a bill.

That’s easier said than done these days.

Also, I’d argue that the impact on Tesla would be relatively small long term. It would facilitate the sales of 400,000 additional vehicles in the US with $7000 in tax credit, which I believe Tesla would do in less than 2 years after the start of Model Y deliveries next year.

For example, the Cybertruck buyers probably wouldn’t even access the new $7,000 credit.

Therefore, I don’t believe that it is critical for Tesla long term, but it would help its US sales in 2020-2021.

In short, I hope it happens, but I wouldn’t load on TSLA because of it. It’s no carbon tax or anything like that.

Full disclosure: I am long TSLA.