New Biden Tax Credit for Purchase of EVs in US Would Be Massive Catalyst for Tesla Sales, Says Wedbush

New Biden Tax Credit for Purchase of EVs in US Would Be Massive Catalyst for Tesla Sales, Says Wedbush

Photo: David Paul Morris/Bloomberg/Getty Images

In Q1 2021 Tesla (NASDAQ: TSLA) faced several difficulties that affected the final delivery results, yet the company was still able to surpass even the most daring expectations and delivered almost 185,000 vehicles. The rest of the year is expected to be even more impressive for the company, in part because of President Biden's policy to further stimulate EV demand in the USA, Wedbush says.

Like other seasoned analysts, Dan Ives of Wedbush sees Tesla entering the next, entirely new phase of growth around the world, driven by a global green tidal wave. Among other things, he points to another real factor that will have great upside potential for stocks in the medium term. Ives draws attention to the efforts of the Biden administration to attract people to electric transport, by introducing high incentives for their purchase.

"We are hearing from our contacts in the Beltway that $7,500 tax credit could potentially be $10,000 in terms of a credit and that's going to be a massive catalyst not just for Tesla, but for the EV ecosystem in the US," said Ives at Yahoo Finance Live.

At the moment, the electric vehicle tax credit for US residents is $7,500, but Tesla owners no longer have full access to it. After an automaker sells 200,000 battery-powered vehicles, a phase-out period begins, which gradually denies access to buyers of the car manufacturer's EVs to this federal tax credit. Tesla and General Motors have crossed this threshold.

However, the Biden administration recently laid out plans to spend nearly $200 billion over eight years to support the fast-growing electric vehicle industry. The administration is rumored to be considering expanding tax breaks for consumers, which could be a big tailwind for Tesla's sales.

Assessing Tesla's growth prospects, Wedbush believes the EV maker’s profitability-free cash flow profile will significantly improve over the next three to four years and forecasts $20 of annual EPS potential by 2026–which could be a momentous event for the entire EV sector. The firm's price target for Tesla has been raised to $1,000 and a bull case price target of $1,300 has been set. The stock is listed by the firm as a top pick of the Green Tidal Wave thesis.

© 2021, Eva Fox. All rights reserved.


We appreciate your readership! Please share your thoughts in the comment section below.

Legal Disclaimer --

This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Eva Fox, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.

About the Author

Eva Fox

Eva Fox

Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.

Follow me on X

Reading next

SpaceX Is A Few Starlink Launches Away To Providing Near-Global Internet Coverage, Next Launch Is Tomorrow
Kum & Go Plans to Add Tesla Superchargers to its Convenience Stores as EV Adoption Accelerates

Tesla Accessories