Tesla Stock Price Today – How EVs Could Get a Big Boost From Biden
If electric vehicles are part of the Biden infrastructure plan, that’s a big deal—for both car buyers and the auto companies. And the biggest winner would be the biggest EV maker,
Right now, the government gives a tax credit of $7,500 for a car. There’s a catch, though: Each manufacturer has a cap of 200,000 EVs sold in the U.S. If they sell more than that, a buyer can’t get the deduction. For example, Nissan hasn’t sold 200,000 of, say, its Leaf EVs, so a buyer gets the deduction. The same is true for other EV makers—the deduction is still available—except two: Tesla (ticker: TSLA) and
GM supports the tax credit—and getting rid of the cap. In an essay on LinkedIn, President
pushed for “smart and effective public policy.” He focused on three key points: investment in fast-charging stations, which would boost consumer confidence in EVs; buyer incentives, including “a modification to the EV tax credit so that customers of first movers like GM are not penalized, and one that makes used EV buyers eligible;” and investment tax credits so companies can build more EV plants in the U.S.
Early on, analysts figured Biden’s plan would lift the cap but keep the credit amount at $7,500. Now, they’re thinking no cap and a $10,000 credit, which would be what Wedbush analyst Dan Ives describes as “a goldilocks scenario in the eyes of the Street” and a spark plug for the sector.
‘s Adam Jonas is telling investors to get ready for “an EV infrastructure bill—including purchase incentives for EVs.” A new federal push wouldn’t only be good for Tesla and the legacy auto makers like GM but EV start-ups like Lucid Motors. Still, for Jonas, the biggest winner would be Tesla. “Put it all together and we believe auto investors face a greater risk of not owning Tesla shares.”
Both Ives and Jonas are Tesla bulls, rating shares Buy. Ives’ target price $1,000. Jonas has an $880 target price.
Tesla would come out on top because of the lifted cap—and buyers would get their tax credit back. And $10,000 is a hefty sum because an EV costs more up front than a gasoline-powered car because an EV battery is more expensive than a gas tank.
Compare a Tesla to two popular gas-powered models. Tesla’s Model 3 starts at about $37,000. With a $10,000 tax credit, the purchase price drops to about $27,000.
(TM) Camrys and
(HMC) Accords start at about $25,000.
The same holds true for other EVs. Both the Chevy Bolt and Hyundai’s Kona start at about $37,000. A Nissan Rogue crossover and
CR-V both start around 25,000.
(F) Mach E starts at about $43,000. A Tesla Model Y starts at about $40,000. A Mach E version that Barron’s drove cost roughly $60,000. A compact
) crossover starts at about $60,000 as well.
The tax credit essentially wipes out the up-front price difference, and an EV costs less to operate and maintain. At current gasoline and electricity prices, charging an EV costs less than fueling up a car. Maintaining one is also cheaper because, essentially, an EV engine is less complicated. Much of the technology is in the batteries, which don’t move and can last hundreds of thousands of miles, as long as a traditional car can stay on the road.
Now, that isn’t to say that everything’s a plus about EVs. There are still range differences and EVs still take longer to charge than gas-powered cars take to fill up. But, shrinking the purchase gap would make many EVs more attractive—and that would mean a boost to demand, which would translate to the EV stocks.
For Tesla, demand isn’t a problem. Tesla beat first-quarter delivery expectations. Yet, the EV pioneer’s stock is down 4% year to date. The
Russell 1000 Value Index
is up about 12% year to date; The
Russell 1000 Growth Index
is up about 4%.
The biggest reason that Tesla is dragging: higher interest rates and a rotation into value stocks. And GM is one of those value stocks benefiting from the rotation. It’s shares are up about 47% year to date.
Write to Al Root at firstname.lastname@example.org