This Tesla catalyst could be HUGE (Ep. 628)

What will happen to Tesla TSLA if the Senate and Home pass a brand-new EV tax credit?

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Tom Randall's Twitter thread summing up EV tax credits:

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This Tesla catalyst could be HUGE (Ep. 628)

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53 Comments

  1. Great video, Dave! I view this more as a battery bill than an EV bill. The caveats necessary to get the credits are heavily focused on domestic battery manufacturing and assembly as well as sourcing minerals from partner nations. Smart because it will incentivize investment outside of China and Russia. This further benefits Tesla because they can continue to source Chinese batteries for MIC Teslas.

    1. China is protected here. Key word: “Assembled”. If you purchase battery tech overseas and build the pack in the US, the credit applies.

      It’s still going to be cheaper to buy from China than from the US manufacturer, who in most cases doesnt exist.

  2. Not a big fan of such substitutions, especially when demand is not the issue. But connecting it with requirements on the supply chain is smart.

    1. They should have focused 100% on building up a local supply chain instead. Giving people money to do what they already do is just a big waste of money.

    2. T Low…I agree the supply chain focus improves on the BBB handout, but I still oppose this unnecessary sales stimulus.

    3. Government regulations are what is restricting the supply chain. Cut the red tape and let the free market function.

    4. This will only work on the lowest price EVs. The Model Y long range does not even qualify.

    5. @Julius Robinson That’s what I was thinking. Also, if Tesla raises prices on all vehicle types, doesn’t that price all of them out of this tax credit? They are close now. I think talking about how this affects Tesla is kind of moot.

    1. Increased supply is one of the ways to fight inflation. Guaranteed profits for automakers = higher production/supply.

  3. *Your videos are always the best to receive a notification each time you post a new video.. We’ll have regrets for things we did not participate in…Investment should always be on any creative mans heart for success in life.*

  4. The last proposed ev bills were anti tesla big auto bail outs and boatloads of cash ti tesla competitors, disguised as bills for evs. Not sure if this will be any better.

  5. The government every 2 months: “oh I know what will stop inflation…let’s spend another 2 trillion!”

    1. I’ve always thought it would either be let legacy fail or let Tesla print money and attempt to save legacy.

    2. @Yourcrazybear Bingo! We either bail them out now with dealer markups, or we bail them out of bankruptcy later.

  6. I expect the CBO analysis of this bill based on expected implementation to say it raises the deficit.

  7. Frankly I think the private sector is doing just fine with batteries and evs. I’d rather see the entire amount used to pay the deficit.

    1. The deficit is not going down. That’s pure accounting gimmickry that would land a corporation in hot water. Politicians have special accounting rules that don’t apply to anyone else.

  8. As always, Dave, an informative broadcast. If I understand this correctly, this new proposed legislation will NOT fully apply to Tesla because, as we all know, Tesla does not have any dealers, at least when it comes to used EVs. Although this should help to boost Tesla with new car sales, it is ultimately still a complicated transfer of wealth legislation. Increased taxes for corporations may continue to feed inflation since corporate America will simply pass any increased taxation to us, the consumers.

    1. Only the standard Model 3 can qualify for the tax credit if Tesla raises prices due to insane demand. This is solely to sell cheap EVs that last less than 300k miles to the poor, to keep them in their place. Either ICE or bad EVs for the poor. This is just another poor tax.

  9. 1) We shouldn’t need a $7500 tax credit in 2032. 2) When you’re in debt, try to earn more money, but stop spending! 3) The focus is on the battery, so that Ford (Mach-E) and GM (Blazer EV) can move production out of the U.S. and still benefit from the tax credit. 4) 500+ pages of bill must have a lot of extra waste added in. I’m a TSLA investor.

    1. Exactly. Theres going to be so much fluff as in any bill.

      How does “assembled in the US” stop the importation of batteries from overseas from established makers? These established producers will always be less expensive compared to new domestic start up/early suppliers.

  10. 1. Everyone is production constrained, so this incentive is completely unnecessary.
    2. The likely actual purpose is to bail out GM, as usual.
    3. By 2030 most new cars will be electric, so there’s no way this bill stays in effect for long.
    4. Unfortunately most Tesla cars don’t qualify. Only the base Model 3 and the Long Range. The Performance would fit into the range with a slight price drop, but then Tesla doesn’t actually benefit from the incentive. The Cybertruck would qualify if Tesla doesn’t go much above the originally promised prices. With this high inflation it’s going to be hard.

    1. GM bail out, yes
      Just order car without options (FSD) if needed to keep price under 80k. You can always buy it later.

    2. On top of the $2.5 billion loan from the Dept of Energy, GM is doing very well…at lobbying

    3. As someone with a CyberTruck Tri-Motor reservation I am expecting a large price increase from the $69,000 + $7,000 for FSD that I was quoted.

    4. I don’t know how so many people keep missing the point of this entirely. The point is NOT to spur customer demand. It is to encourage manufacturers to step up production. They are reluctant to do that because they don’t yet have the scale to make EVs profitably (which requires somewhere on the order of 1M unit/year runrate). Ford just announced they no longer make a profit on the Mach-E. Why would they further ramp something they lose money on? Now, imagine they have a guaranteed profit… Well, now they can pump out EVs like crazy. If you don’t think this is how it works, look at Toyota. They are obsesses with hydrogen after the Japanese government did the same thing there for hydrogen. That has suddenly become their entire reason to exist the last few years. If GM, Ford, et. al have a strong financial incentive to increase EV supply, that is a MASSIVE win for us all.

      As it is now, EVs are a massive financial risk to most legacy automakers, since 1) they are not yet at the scale needed to see positive margins, and 2) since EVs require little maintenance, and legacy auto gets almost all of their revenues from financing, and parts and servicing, they effectively destroy the bulk of their future revenue streams with each EV they sell. So, again, until they are selling MILLIONS of units per year, EVs are a financial ENEMY to legacy automakers. The EV credit is absolutely *essential* to make this happen faster.

    5. @AMortalDefiant As a taxpayer, I love the concept of having to guarantee profits for inept management.

  11. I do not get it. In the only reasonable scenario for Tesla (and from my understanding it is about the same for all other auto makers), each model that qualifies will get 7.5k$ more expensive., Tesla will have 7.5k more cash per car. But will that allow them to build cars quicker, to ramp faster? Build more factories earlier? IMHO no. Money is not the constraint and so more money will not help.

    Help domestic miners, recyclers and refiners directly to get up battery supplies fast. Everything else makes zero sense. IMO.

  12. So, this bill just stunted ev sales growth for remainder of year. Plus, the provision that all corporations pay minimum of 15% income tax is just a pass through cost to consumers. Also, the “Stealerships” modifier will make it so Tesla buyers receive no incentive. Since all but the cheapest M3 is excluded, this bill will help Tesla margins and ICE/ev Stealerships as they’ll simply adjust the sticker price.

  13. Tesla did well in 2020 and early 2021 but not so great now, Tesla stock is volatile and has suffered several corrections along the way to its current high valuation. And if the stock reacts as it did during the 2020 stock split, waiting may not be the best decision for investors..What’s the best strategy to make gains in this present market condition?My portfolio is still down by 20% and It scares the hell out of me

    1. The truth is building a good financial-portfolio has been more complex since covid, so I would recommend you seek professional support. This way you can get strategies designed to address your unique long-term goals and financial dreams.

    2. Tesla is a good stock, knowing when to buy is the best part. If you are not conversant with the markets, I’d advise you to get some kind of advise or assistance from a financial/investing coach. It might sound basic or generic, but getting in touch with a financial adviser was how I was able to outperform the market and raise a profit of $250,000 since Jan. For me, its the most ideal way to jump into the tesla market these day

    3. @Margaritas 🍸 how’d you go about getting a proper investment-adviser like that, I’ve had plans to touch base with one, I’m just not sure how to go about it, I don’t mind looking up this one that guides you.

    4. @Margaritas 🍸 Thank you for this Pointer. It was easy to find your handler, She seems very proficient and flexible. I booked a call session with her.

  14. There needs to be an EV price limit increase and wage increase to match inflation. A decade is a long time.

  15. Why are used car sales limited to only car dealers? Is Tesla considered a dealer?
    This bill will simply allow manufacturers or dealers to further increase the price or mark up of EVs. It will not accelerate the transition to sustainable energy as supply contraints are the limiting factor, not lack of affordability.

  16. Dave, Always love your video’s.
    How about length of time you must keep the vehicle after having received this credit?

  17. Hi Dave, thank you so much for the timely update! Question: currently all tesla car prices are above the required $80K/$55K$25K…how do you think tesla would benefit from this bill if passed? thanks.

    1. Model 3 below $55k will benefit. The limit for SUV is $80K so all the Model Y will benefit.

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