Tesla. Has. Crashed.
And no, I’m not talking about an autonomous vehicle hitting a wall or driving off a bridge. Instead, Tesla stock has taken a nose-dive and crashed. Hopefully, their stocks have an airbag to cushion the blow.
Yikes, that’s reminiscent of a texting-while-driving-in-rush-hour crash.
According to The Register:
Tesla’s share price took a dive Thursday morning as Republicans in Congress revealed they were planning to kill off a US federal tax credit for electric vehicles.
The proposed House tax bill calls for an immediate repeal of the $7,500-per-vehicle credit: something that would have an immediate knock-on impact for Tesla given that it only produces electric cars.
Its share price fell more than seven per cent to about $296 apiece from Wednesday’s $321. The draft law emerged as the Elon-Musk-led automaker announced its worst-ever quarter, recording a $671m loss and admitting it had not met its production target for its new Model 3 car, producing just 220 of them against its 1,500 target.
The potential removal of these federal tax cuts has a significant influence on consumers.
In Georgia, for example, when the state legislature “cut its $5,000 tax credit” the sale of electric cars decreased from “1,400 a month to just 100 a month in response.”
In other words, consumers care less about the environment and more about their wallet. Tesla knows this. Their website even factors in the federal tax credit in Tesla’s pricing.
The Bill has not went through Congress but “is seen as a blueprint for the Trump administration’s tax shakeup” for further reform:
Scrapping the leccy car deal will increase US tax revenues by $4bn, it is estimated. That’s a good saving seeing as the Republicans are desperate to balance America’s books while cutting the corporate tax rate.
Under the process the Republicans intend to use to pass their tax reform bill, it is necessary for the country’s figures to balance – any cuts have to be met with additional tax income. So far, the plan is expected to cost the Land of the Free $1.5tr over 10 years.
While their stocks have decreased significantly, Tesla is not the only car company that will suffer.
Companies like Nissan and General Motors have their own electric car. The latter stated, “Tax credits are an important customer benefit that can help accelerate the acceptance of electric vehicles. Because General Motors believes in an all-electric future, we will work with congress to explore ways to maintain this incentive.”
Or, you know what you could do GM? Stop relying on the federal government as your business model.
They’ve already bailed you out once…now you’re relying on them for marketing and consumer strategy?
Maybe you should invest a bit more money on product and market research, advertising, etc. instead of expecting a tax credit from other people’s money to drum up sales.
No one–not a business or an individual–should ever become dependent on the government; especially not a large corporation like General Motors.
What is your opinion of electric car companies dependence on tax credit for sales? If you don’t have a market, can you really expect the government to create one for you?