Tesla Motors Inc (TSLA) Braces For Potentially Brutal Republican Reign


Tesla Motors Inc (NASDAQ:TSLA) shares are down more than 20% for the year and 18.54% for the last three months despite the automaker reported a surprisingly profitable third quarter this year. According to a report from Business Insider, the immediate problem for the electric car maker is political as US president-elect Donald Trump’s policies may impact the electric car maker.

Experts are warning that Tesla will be negatively affected by the Trump presidency. A Republican-controlled White House and Congress is likely to support new energy policies favoring traditional fuel sources, like oil and coal. According to the report, the Trump administration is unlikely to be friendly to electric cars. Experts believe that Tesla may have a rough four years and it will likely to be the most watched car maker in the U.S. auto industry during the Trump presidency.

Tesla Motors Inc (TSLA) Factory Freemont, California

Why Tesla Is Worried About Trump Presidency

With a market cap of more than $26 billion, the Musk’s car company looks to be in a very good position. The automaker is looking to sell a record-number of electric cars in 2016. It received nearly 400,000 per-orders for the Model 3 mass-market vehicle.

The report from Business Insider suggest that the worry for Tesla “now is that the end of the year and beginning of the next haven’t been happy financial times for the company, historically.

The automaker’s shares “have a pattern of sliding through the fourth quarter and continuing their decline into the first, only recovering once it establishes guidance for deliveries for the next year.”

Musk Doesn’t Like Trump

Tesla Motors Inc (NASDAQ:TSLA) would face a tough time without state subsidies and support. Tesla CEO Elon Musk has repeatedly said that Trump is “not the right guy” for job as president of the United States.

During the 2016 election campaign, Trump has promised that he may quash regulation on fossil fuels. Trump has also been a strong supporter of the Keystone XL oil pipeline, as well as he is a strong advocate for the coal industry.

Additionally, Trump noted that his energy policies would refrain from picking winners and losers. And this is what is worrying green firms, like Tesla.

Musk, who has been highly critical of Trump for the last 18 months, believed that Hillary Clinton and her various domestic policies were “the right ones” for the country.

So in addition to the lack of subsidies, tax credits available to consumers may impact Tesla and other green companies.

As we reported earlier, tax credits available to consumers who want to buy electric cars are expiring soon. The tax credits give consumers up to $7,500 for buying an electric car. This means a Model 3 would see its price-tag slashed from $35,000 to $27,500. There is a possibility that Trump and the GOP would not renew the tax credits, creating problems for Tesla and other companies.

Tesla is Probably Safe

A report from Bloomberg suggest that Tesla Motors Inc (NASDAQ:TSLA) ais an electric car company, but shareholders on November 17 will vote on final approval of the company’s $2.2 billion deal to buy SolarCity. If approved, the deal would make Tesla the biggest rooftop solar installer in the U.S.

The U.S. has two government policies to spread the rooftop solar in the country. First, utilities are required to credit homeowners for the excess power they send back to the grid. Those requirements are state-level and shouldn’t be affected by Trump, according to Bloomberg.

Second, there is a 30% federal tax credit for the solar installations. This tax credit was first signed into law under Republican President George W. Bush in 2005 and extended by a Republican Congress late last year. “Given their broad support, the subsidies are unlikely to be repealed,” the publication noted.

In other news, the automaker’s Model S has been voted the Most Loved Model in America for the second time in three years.


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