1200px Roadster 2.5 windmills trimmed

Tesla Gets a Big Boost in Washington. Investors Don’t Notice.

Legislation increasing U.S. purchase incentives for electric vehicles made it out of a Senate committee. It’s a potential boon for American carmakers, including

General Motors,

Ford Motor,

and, of course,


But investors seemed to react Thursday with a yawn. They may be overlooking a few key details. President Joe Biden has proposed several EV incentives since taking office. One of the bills with EV incentives is the Clean Energy for America Act. The bill made it out of the Senate Finance Committee Wednesday with a critical modification from Sen. Debbie Stabenow (D., Mich.). The Made in America provision continues the $7,500 tax credit for EV purchases through 2026—significantly eliminating a cap affecting General Motors (ticker: GM) and Tesla (TSLA). But an additional $2,500 credit is added for cars assembled in the U.S., and another $2,500 for vehicles built with unionized labor.


GM, essentially, goes from $0 purchase incentives to $12,500 per vehicle. A new Ford (F) F-150 electric pickup truck suddenly starts at about $27,500 with incentives instead of $40,000. And Tesla gets a $10,000 per-car incentive, more than the $7,500 tax credit it received earlier. Tax credits are actually for car buyers. They reduce taxable income, effectively acting as a rebate for an electric car. Automakers saw the benefits phased out as they sold more EVs, and eventually, the benefits stopped after 200,000 EVs were sold. GM and Tesla are the two automakers that hit the 200,000 threshold.

Getting the bill out of committee is good news. It means there is bipartisan support, although it passed the committee by a vote of 14 to 14. The amount of the credit—$12,500—is higher than expected. The $10,000 figure for Tesla is good news too. Now it has to pass the full Senate. Tesla stock was down most of the day. Maybe investors got the message late. It rallied to close 1.9% higher. The

S&P 500


Dow Jones Industrial Average

both closed up less than 0.5%.

Ford and GM stock rallied 7.1% and 2.9%, respectively. Both stores also had nonlegislative catalysts: Ford shares were upgraded by RBC analyst Joe Spak. GM announced it was restarting plants as the global semiconductor shortage eased. That announcement is good news for everyone. GM and Tesla, the two biggest beneficiaries of changing EV credits, weren’t immediately available to comment on the legislative process. Wedbush analyst Dan Ives, however, is feeling bullish about the news. Ives told Barron that the amount of support is larger than he expected, and passage is likely closer than investors expect.


I have always enjoyed writing and reading other people's blogs. I started writing a journal as a teenager and have since written numerous books and articles. My blog is a place where I can write freely about my personal interests and those of others.

Leave a Reply

Your email address will not be published. Required fields are marked *