Tesla’s Stumble Not Biden’s Fault, Says Fund Manager, While Trump’s Return Could Hurt EV Industry
Tesla, Inc. (TSLA) has seen its share price struggle since 2022, but according to a fund manager, this weakness is not a result of President Joe Biden’s policies. Instead, Gary Black, Managing Partner of The Future Fund LLC, attributes Tesla’s downturn to its own self-inflicted wounds, specifically its successive price cuts that failed to boost sales volume.
Key Takeaways:
- Tesla’s woes are its own making. Its aggressive price cuts did not lead to increased sales, highlighting the inelasticity of demand for its vehicles.
- Biden policies, particularly the $7,500 federal electric vehicle tax credit, have actually benefited Tesla. Without this incentive, the company’s performance would have been even weaker.
- Analysts are divided on the implications of a Trump presidency for Tesla. Some predict a negative impact on the entire EV industry due to the potential removal of EV incentives, while others see a potential advantage for Tesla due to its scale and scope.
- Trump has vowed to end federal support for EVs, but has since softened his stance, now opposing only 100% electrification.
Tesla’s Self-Inflicted Wounds: Price Cuts & Inelastic Demand
Gary Black, a seasoned market analyst, argues that Tesla’s recent struggles are a consequence of its own decisions. He points to the company’s aggressive price cuts, which have not resulted in increased sales volume as anticipated. This indicates that demand for Tesla vehicles is relatively inelastic, meaning that price changes have a minimal impact on consumer buying habits.
Black emphasizes that Tesla’s woes cannot be attributed to Biden’s policies, especially considering the positive impact of the $7,500 federal electric vehicle tax credit. He notes that without this credit, Tesla’s performance would have been even worse.
Trump’s Return: A Mixed Bag for Tesla?
The upcoming US presidential election is creating a divide among analysts regarding the potential implications for Tesla and the broader EV industry. While some see a Trump victory as a blow to the EV sector, others believe it could benefit Tesla specifically.
Daniel Ives, a Tesla bull, predicts that a second Trump term could be unfavorable for the EV industry as a whole, given the likelihood of the EV tax incentives and rebates being eliminated. He believes this would be a positive development for Tesla, which he views as the industry leader with the scale and scope to thrive in a non-subsidized environment.
However, Mark Spiegel, a Tesla bear, sees the removal of the $7,500 subsidy as a significant blow to Tesla, which is already facing margin pressures. He also anticipates Trump repealing EV mandates, which would deprive Tesla of a major source of high-margin regulatory credits.
Trump’s Changing Tune on EVs: A Shift in Strategy?
Donald Trump has made his opposition to federal support for electric vehicles clear, pledging to end it on day one of a second term, arguing that it would save the auto industry from being obliterated. However, at a recent campaign rally, Trump appeared to backtrack on his stance, clarifying that his objection is only to 100% electrification. This shift in rhetoric suggests a potential evolution in his EV strategy, though the details remain unclear.
The Future of Tesla and the EV Industry hangs in the Balance
The current market uncertainty surrounding Tesla and the broader EV industry is significant. While Black’s analysis suggests that Tesla’s performance is primarily driven by its own decisions, the potential impact of a Trump presidency remains a key factor. The outcome of the upcoming election could drastically reshape the industry landscape, impacting Tesla’s future direction and the broader adoption of electric vehicles.
