I found a good piece of reading about this subject here
The Clean Energy for America Act and Its Potential Impact on Tesla (October 2021).
Here are a few clips;
Tesla cars bought after May 24, 2021 would be retroactively eligible for a $7,500 tax credit on 2021 tax returns.
Tesla cars bought after December 31, 2021 would be eligible for: In the House version, an $8,000 tax credit (excluding the Model S and X), but in the Senate version, a $10,000 tax credit (excluding the Model S and X) on 2022 tax returns.
Summary: Pending EV tax credits would have a positive impact on Tesla by making most Tesla cars eligible for an $8,000 (House version) or $10,000 (Senate version) tax credit and handicapping Chinese EVs from entering the US market. However, Tesla does not employ unionized labor, so Tesla would be ineligible for an additional $4,500 (House version), or $2,500 (Senate version) credit that companies such as Ford and GM would gain.
Seven Takeaways for Tesla:
1. With the 200,000 vehicle cap removed, Tesla cars sold after May 24, 2021 would be eligible for a $7,500 credit.
This is the standard credit of $7,500. Any of the enhanced credits for cars assembled in the United States and/or assembled by union labor would not take effect until 2022.
The renewal of an EV tax credit for Tesla provides new opportunities for growth
2. Most Tesla cars sold starting on January 1, 2022 would be eligible for an $8,000 or $10,000 credit.
This credit includes both the $7,500 main credit plus another $500 for Tesla cars with American-made batteries (House version), or another $2,500 (Senate version).
Tesla cars would not be eligible for an additional $4,500 credit (House version) or additional $2,500 credit (Senate version) because
Tesla employees are not unionized.
The MSRP cap set by both the House ($55,000 for sedans, $69,000 for SUVs, and $74,000 for trucks) and Senate ($80,000) will have the same effect upon Tesla cars:
- All three versions of the Cybertruck would qualify
- All versions of the Model 3 would qualify - Not sure about this, Model 3 Performance starts at $56,990
- All versions of the Model Y would qualify
- *All versions of the Model S and Model X would NOT qualify
3. Because the extra $500 credit (House version) or $2,500 credit (Senate version) would not apply until 2022, the law could depress sales in Q4 2021.
If someone waits until 2022 to buy a new Tesla, they would eligible for an additional $500 or $2,500 credit. This could have a negative effect upon Tesla in 2021 by causing some people to delay their purchase until 2022.
4. A $2,500 credit for used EVs could help the used Tesla car market.
Since this credit equally applies to all EV car makers, this credit would help equally and not be unfairly biased against Tesla.
5. The exclusion of Chinese-made EVs from the tax credit is a blow to Chinese EV companies such as NIO and Xpeng.
Many view NIO and other Chinese EV companies as a potential threat to Tesla, so Tesla stands to gain from this bill. However, it's unclear if these Chinese EV companies are even intending to prioritize the US market. Thus, the competition between Tesla and these Chinese EV companies may play out in China more than in the United States. But this law would further disincentivize Chinese EV companies from targeting US customers by handicapping their access to the US market.
A Chinese-made EV would essentially cost $10,000 to $12,500 more than an American-made EV. This would be another win for Tesla and every other American EV car maker.
6. Tesla is clearly disadvantaged against companies with unionized labor like Ford and GM.
The House version gives unionized companies a $4,500 advantage, while the Senate version gives unionized companies a $2,500 advantage over Tesla.
We believe this to be unfair since Tesla leads the way in selling the most number of EVs and is poised to win the autonomous driving revolution.
7. However, Tesla may still outperform its competitors, which is why ETFs like $VCAR may benefit from the tax credit.
Tesla sold
500,000 EVs in 2020 in the U.S., while GM sold
26,552 EVs, and Ford sold
3(!) EVs (and an unknown number of hybrids). In the first six months of 2021, Ford sold
12,975 EVs, GM sold
20,288 EVs, while Tesla sold
386,161 EVs. The numbers are not even close, while Tesla continues to grow. We see potential upside with Tesla not only with sales growth, but with its
imminent release of Full-Self Driving (FSD), hence our options based strategy in our conveniently packaged
ETF $VCAR.
www.cnbc.com
