Is Biden Tesla’s Saving Grace?
Tesla Is In For A Tough Year. President Biden May Be Its Savior.
January 23, 2023
The Biden Administration’s bullishness on EV-friendly policy may be Elon Musk’s saving grace.
Tesla Inc.’s current disarray in light of failing to meet delivery expectations seems to be the culmination of a particularly turbulent past two years. The automaker and its eccentric CEO and founder, Elon Musk, meteorically rose during COVID-afflicted years to become the most valuable manufacturer in the world, sending shockwaves of panic to the old American guard of Ford, General Motors and co and redefining the applicability of electric vehicles to American life.
Of late, Tesla’s challenges have seemed more multifaceted and exponential, with issues effervescing in China (their most profitable market), competition at home amplifying, a torrid series of stock performances that have lead to valuation-shedding, and of course the immutable Mr. Musk preoccupying himself with the quandary that is how to manage Twitter. Wall Street writ large has written off Musk's marquee company as one that will underperform in 2023, and Tesla has begun offering discounts on its vehicles to assuage negative sentiment from delays.
Tesla's saving grace manifests in an unlikely form: The Biden Administration. Should the automaker manage to mitigate the torrential slew of factors going against it, the President's aggressive agenda in expanding EV-friendly initiatives may soften the blow. Granted, it would also do so for the existing gargantuan American motor overlords. But Wall Street seems unaware of the avalanche of regulatory proceedings across the country that are paving way for Tesla to return to glory.
The linchpin of this is of course the Infrastructure Investment & Jobs Act & The Inflation Reduction Acts, sweeping pieces of legislation that the Biden administration has become synonymous with.
The provisions for electric-powered vehicles, buses and ferries are multifaceted and unprecedented, with over $5 billion allocated to the National Electric Vehicle Infrastructure Formula Program (NEVI). With the gusto of Eisenhower expanding the Federal Highway Program, the umbrella of the IIJA and IRA has seen the executive branch, state legislatures and financial entities alike scramble to take advantage of the hospitable, green vehicle climate amidst a time when, according to the U.S. Energy Department, cumulative plug-in vehicle sales reached over 3 million cars in 2022 (it took eight years to reach a million cars from 2010, and just two and a half to reach 2 million).
NEVI's undertaking is no small feat -- EV infrastructure is being installed across 75,000 miles of highway with the ultimate goal of creating a national charging network of half a million chargers by 2030. With regards to the IRA, the Clean Vehicle Credit program, which provides up to $7,500 for those within specific income brackets, has acted as a watershed for first-time and veteran buyers alike to consider an electric vehicle. If NEVI's $5 billion wasn't enough, the Department of Energy's Fossil & Carbon Management office is rolling out an additional $96 million to fund carbon-emission friendly vehicle application across both the commercial and industrial sectors. Every walk of life -- including children's school buses in 389 school districts -- is being electrified. Tesla may find itself in a quagmire, but a smorgasbord of incentives and laws are going their way.
Federal agencies of Biden's seem to also be targeting an issue that has begun to evoke geopolitical tensions: the pursuit of precious metals. In an America-first mentality that Russia's invasion of Ukraine & China's bellicosity has given risen to, federal and state departments have not been reluctant to cement the U.S. as a country that has firmly accounted for its stockpile of lithium, graphite, and other crucial rare earth substances necessary to manufacture EVs. The DOE is allocating $335 million in investments from the IIJA to establish the nation's first robust lithium-ion battery recycling program; lithium batteries are the nucleus from which engine-grade technology is created. In October 2022, Biden announced that 20 companies across 12 states will receive $2.8 billion to develop commercial grade lithium technology. China’s own EV automakers are making rapid progress in building their market share, with household names like BYD, Chery and Changan posed to only further stunt Tesla’s growth in its biggest market. Biden prioritizing the security of said metals will only strengthen Tesla's production facility operations across Texas, Nevada, California and beyond.
The groundwork for Tesla -- and its customers -- to capitalize upon is coming. The ball is in the company's court. 2023 will be a rocky year for the automaker, especially as their competitors at home ramp up production and similarly take advantage of the EV-friendly policies championed by the Biden administration, and their competitors abroad seek to imitate and overtake. Musk hiring a new CEO for Twitter could also help in redirecting the enigmatic founder's focus back onto the company that made him one of the wealthiest men on the planet. Tesla must awaken to the policy avalanche that is coming its way; else it shall languish as its competitors speed ahead.