Former Tesla Inc TSLA executive Rohan Patel said on Sunday that the Inflation Reduction Act (IRA) passed by the Democratic Party has “disproportionately” served in the EV giant’s favor.
What Happened: Contrary to popular claims of Tesla having been sidelined by the Democratic Party, the company was at the table for many discussions with Democratic congressional leadership and the White House, Patel said. Patel was Tesla's vice president of global public policy and business development until April earlier this year.
“The IRA was passed exclusively by Dems and it has helped Tesla tremendously,” Patel said.
The Act disproportionately served Tesla over legacy automakers as the company is also involved in solar deployment and manufacturing, charging manufacturing and deployment, stationary storage manufacturing and deployment, battery manufacturing, and lithium refining, among other activities incentivized by the bill. Legacy automakers are not involved in many of these activities, he noted.
Furthermore, the EV purchase incentive of $7,500 does not extend to many of the plug-in hybrids manufactured by legacy automakers, Patel noted.
“There is a mistake thought that plug-ins disproportionately are benefiting from the IRA – just not true,” Patel said, while adding that Tesla is in the “best position” to fully avail the incentives under the act. “It is incredibly hard to meet the local production and supply chain requirements.”
Only seven plugin hybrids manufactured by legacy automakers are eligible for an EV purchase credit and all of them, with the exception of Chrysler’s Pacifica PHEV, are only eligible for a federal tax credit of $3,750 or half the maximum credit of $7500, he noted.
In comparison, three variants of Tesla’s Model 3, all variants of the Tesla Model Y, and one variant of the Model X are eligible for a purchase incentive of $7,500.
Why It Matters: Patel has previously also refuted claims that Democrats hate Tesla.
"Even after the harshest tweets (by Tesla CEO Elon Musk) against Newsom or Biden or another Dem, their teams and governments did not shut me or my team out and were professional in working with us for the greater good," Patel said last week.
California Governor Gavin Newsom and his team have "bent over backwards" to help the EV giant despite Musk’s criticisms, he added.
Last month, Patel also said that the Biden administration treated the EV giant fairly in certain issues despite “surface-level disappointment” between the President and Musk.
“No doubt Biden is very biased towards unions and appoints pro-Union people to the nlrb making it easier to organize. But it didn't often create substantive problems, and instead was more of a PR and surface-level disappointment,” Patel wrote on X while adding that it is just his personal view.
As for Republican Presidential candidate Donald Trump, he too has made attacks on Tesla in the past, Patel said on Sunday, referring to charges of fraud brought by the Securities and Exchanges Commission (SEC) during Trump’s former term as President which forced Musk to step down as Tesla’s Chairman in 2018. Trump also had a meeting with auto executives in January 2017, excluding Tesla, he alleged.
Tesla CEO Sides With Trump: Musk officially endorsed Trump in July after a shooting incident on the latter at a rally in Pennsylvania. The former President is seeking the elimination of subsidies for electric vehicles.
However, Musk said during the company's second-quarter earnings in late July that the impact of the elimination of subsidies would only be slight for Tesla but devastating for its competitors. The elimination of EV subsidies would probably help Tesla in the long term, he added.
Earlier this month, Musk told Lex Fridman in a podcast published on Friday, that he discussed the idea of a "government deficiency commission" with Trump in case the former President reclaims the White House. The CEO also expressed his willingness to be a part of it.
While Musk did not detail the purpose of the commission, he hinted that it might be aimed at removing an “accumulation of laws and regulations” that prevents key development projects.
Trump too said earlier this month that he is “for” EVs. “I have to be, you know, because Elon endorsed me very strongly. So I have no choice," Trump said in his first joint rally with his vice presidential pick JD Vance in Atlanta.
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