Anyone that wants to understand Trump needs to keep the following in mind:
He's a BUSINESSMAN. This means his mindset towards the economy, energy, defense, etc. will always be "does this make financial sense" or "can we afford this".
Renewables are now able to compete, without subsidies, with traditional energy sources. Wind and Solar are DIRT cheap, even without subsidies because the industries have now grown up, he's not stupid and understands that.
That may be a fact, but the messaging he gets will be determined to a large degree, by those surrounding him. He has a lot of traditional energy people associated with his campaign and on the transition team. I personally don't think they'll make changes to existing subsidies in 2017. The 30% solar tax credit in 2018 has to be considered in play. Sequestration is still the law, so they could be looking for current expenditures that are unpopular with his backers. It's a risk at this point. I think risks to 2017 incentives are very moderate. He wants to move fast, and some of his agenda may require bipartisan support to eliminate or change current budget law, where he may need 60 votes. Risks to 2018 incentives are much higher, but risks to Tesla decline the longer incentives are stretched out. Tesla auto would be fine if incentives were removed in 2017, but it could impact the stock price in the short term. It might push more initial sales outside of the US. Elimination of the tax credit in 2018 would put focus for all 2017 Model 3 deliveries to the US. It might also result in a lot of one way flights to SFO to pick up Model 3 deliveries in Fremont next December.
I think risks to Tesla Auto are very minor. The tax breaks begins to phase out at the end of 2017 or Q1 2018 anyhow. It would be a bummer for Model 3 customers, but would probably not affect overall sales, and might push some 2017 sales to Model S. The risks to Tesla Energy are not existential, but the impact to solar seems significant. The move from coal will continue and probably accelerate due to less regulation on fracking. This will keep pressure on solar to compete with low cost natural gas, which is not likely to rise above the 2.50 to 3.00 per MMBTU range. Without the tax credit, I think installed solar costs have to fall below $3.00 per KWh to compete outside of regions with upper quartile energy costs. I think the aesthetic of the new Tesla solar roofing will still get sales for higher end homes and consumers who can afford premium prices. Utility and commercial peered with battery systems will still be have functional and cost advantages over their competition. We still don't know enough about Tesla Energy overall utility, commercial and residential costs for a post incentive environment of competition to understand their potential profitability and scope of the market.
An interesting policy issue that has come up is making renewables eligible for MLP status could allow for loss of the 30% solar tax credit with minimal impact to price competitiveness vs wind and nat gas. Currently oil and gas are eligible for MLP tax advantage status and opening this up for renewables, would be a great compromise path to eliminating tax deductions.
The biggest opportunity for regulatory relief is state sales restrictions. It is hard to say if Trump administration will side against Tesla. Dealers tend to Republican affiliation, but deregulation could work to Tesla's advantage.
Overall, Tesla auto seems to have low risk of policy impact, at least from the loss of consumer tax credits. Tesla solar rate of growth could be impacted by tax credit losses in 2018, but continued cost reductions below $3.00 per KWh will allow solar to compete with Nat Gas in the $3.00 per MMBTU price range. MLP status could mitigate the loss of tax credits. Tesla auto sales centers in red states could benefit from deregulation, but this seems like a stretch. Loss of tax credits puts pressure on Tesla to hit timelines in 2017 and perhaps focus sales in the US in the second half of 2017. Some margin pressure on solar, probably offset by Tesla battery margins could leave us with a neutral result. No bevy of Clinton incentives, but no paralyzing policy issues.
Sorry to run on past the $7500 tax credit, but it's the weekend, and Tesla incentives are moving past the $7500 car deduction.
. Thanks for allowing the outlet.
