Shares of Tesla skyrocketed today amid word that there may be an extension to the federal tax credit for EV purchases. By the end of trading on Monday, Tesla stock was up 23 points and closed out the day at $381. Notably, the $381 closing price marks a new all-time high for Tesla shares.
As we covered a few weeks back, the ability for Tesla buyers to take advantage of a federal tax credit is slowly but surely coming to a close. Whereas Tesla buyers a few years back were able to enjoy a $7,500 tax credit, that figure has since dropped down to $1,875 and is set to expire at the end of the month.
As part of a proposed bill that would certainly help boost Tesla sales, EV buyers would be able to take advantage of a $7,000 tax credit so long as the car manufacturer in question hasn’t delivered more than 600,000 electric vehicles. Under the current scheme, the maximum credit of $7,500 was only in play for the first 200,000 EV deliveries of a particular manufacturer, a threshold Tesla passed more than a year ago.
2) After 600k total EVs are sold by a manufacturer, a truncated phase-out begins. Two quarters later, the credit drops to $3,500, two quarters after that it's done. Tesla and GM owners who bought in 2019, after the old phase-out began, would get the $7k credit at tax time
— Tom Randall (@tsrandall) December 15, 2019
Automotive lobbyists have been pushing for a more generous tax credit window for some time now, but MarketWatch relays that the bill is starting to pick up traction.
“Thanks to bipartisan, broad-based support, we believe the EV tax-credit extension is very well-positioned for enactment,” said Mike Carr of the EV Drive Coalition, a group whose members range from Tesla, GM and Nissan as well as from the Nature Conservancy to charging station providers Volta and ChargePoint.
“A large and diverse set of stakeholders — including environmentalists, public health groups, automakers and utilities — are urging Congress to act given its consequences for American global competitiveness, clean air and climate change.”
It will certainly be interesting to see if the bill becomes law or if opposition from within Congress stops it dead in its tracks.