Tesla Inc TSLA shares are moving lower Thursday following reports that president-elect Donald Trump plans to get rid of consumer tax credits for EVs. Wedbush analyst Dan Ives believes the cuts are actually net positive for Tesla.
What To Know: Trump’s team is planning to squash the $7,500 EV tax credit on vehicle purchases as part of a broader tax-reform plan, according to a Reuters report citing two sources with direct knowledge of the plans.
Getting rid of the EV tax credit could significantly impact the United States’ EV transition efforts, but Tesla CEO Elon Musk, who has been one of Trump’s biggest supporters, reportedly told Trump’s team that he supports putting an end to the EV tax credit.
Why It Matters: Ives, a longtime Tesla bull, explained in a new note to clients on Thursday that the news is not a surprise “in any way,” as Wedbush fully expected Trump to tear down the tax credits upon returning to the White House.
“While this is a clear negative for the EV industry at first look and would particularly hurt GM, Ford, Stellantis, and Rivian… on the flip side we view this as a net bullish move for Tesla and Musk over time,” Ives said in the note.
See Also: Tesla’s Profit Power Vs. Rivian’s Cash Burn: Can The Gap Be Narrowed?
Musk reportedly said earlier this year that removing the EV tax credit could have a slight impact on Tesla sales, but would be far worse for his U.S.-based competitors.
Ives noted that Tesla has unmatched scale. The Wedbush analyst acknowledged that getting rid of the EV tax credit could weigh on demand , but he believes it will actually propel Tesla further ahead of competitors. Comparing Tesla’s pricing, scale and scope to legacy automakers making the EV transition is like comparing apples to oranges, Ives added.
“We expect Musk to have a big seat at the table as these EV discussions happen within the Trump transition team. We believe any sell-off in Tesla from these reports is the wrong knee-jerk reaction and we would be buyers,” Ives said.
The Wedbush analyst maintained an Outperform rating and price target of $400 on Tesla stock following the news.
TSLA Price Action: Tesla shares were down 5.11% at $313.41 at the time of publication Thursday, according to Benzinga Pro.
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