What a Biden White House could mean for Tesla

President-elect Joe Biden presents a mixed bag for Tesla and other electric car makers.

On the pro side, Biden’s stated clean energy and manufacturing goals could mean new government incentives for U.S. manufacturers, especially electric vehicle makers. But tighter enforcement of labor, financial and other regulations could make it harder for Tesla and its mercurial CEO Elon Musk to push the boundaries.

Tesla bulls and bears have the ear of the president-elect – Kynikos Associates founder and famous Tesla shorts seller Jim Chanos was an early promoter of Biden, and Steve Westly, a former board member of administration of Tesla, has also been a great fundraiser for Biden.

Here’s a look at what investors might see during a Biden administration.

In its third quarter earnings report, Tesla reported $ 397 million in revenue from sales of environmental regulatory credits. This marked its fifth consecutive quarter of reported profitability, each made possible by sales on credit.

The importance of these credits suggests that the financial fate of the business could vary considerably with sweeping policy changes.

Fortunately for Tesla and Musk, Biden’s “Build Back Better” policy goals for clean energy and manufacturing would give Tesla and other domestic electric vehicle makers a boost, including General Motors, Rivian and Lucid.

Its stated objectives include:

• Creation of an electric vehicle charging infrastructure, addition of at least 500,000 additional charging stations in the United States
• Creation of a million new jobs in the US auto sector alone
• Replacement of the federal government fleet, including cars used for postal service and other federal activities, with electric vehicles
• Work with States to Create Stricter Emissions Guidelines for Internal Combustion Engine Vehicles
• Outperform China in Electric Vehicle Manufacturing (Including Materials and Parts)
• Offer discounts, reminiscent of the old Cash for Clunkers program, to consumers who trade in less efficient vehicles for newer, greener cars made in the United States
• Increase research and development related to batteries at the national level.

The new focus on electric vehicles is likely a net benefit to Tesla’s auto business, depending on how much of that agenda Biden can go through in a potentially divided Congress.

However, Biden’s broader policy includes the goal of strengthening unions, which are currently absent from Tesla’s U.S. manufacturing plants.

Musk and Tesla have clashed with the National Labor Relations Board in recent years. In September 2019, a California administrative judge ruled the company had violated national labor laws after Musk tweeted that Tesla workers should give up their potentially lucrative stock options. ‘they were getting organized.

Tesla was ordered to hold a meeting at its Fremont, Calif., Car assembly plant with the CEO in attendance to educate workers on their rights and say exactly how Tesla had previously broken the law. Musk has been ordered to attend this meeting. However, the company is appealing the decision.

Additionally, a Biden White House could make changes to various regulatory agencies, potentially leading to closer scrutiny of Tesla and its CEO.

For example, financial regulators settled with Tesla and Musk for $ 20 million each after the CEO tweeted in 2018 that he planned to privatize the company at $ 420 a share, pushing shares up before they were sold. arrested. The SEC did not respond when Musk provoked them with a tweet that read, “SEC, three-letter acronym, middle word is Elon,” in July of this year.

In addition, car safety regulators NHTSA and the consumer protection agency FTC have generally not intervened in Tesla’s automated driver assistance practices and the way the company markets these features.

Tesla sells “Autopilot”, “Enhanced Autopilot” and “Full Self-Driving” options that don’t give drivers a fully hands-free autonomous driving experience, despite what the names imply.

Tesla even rolled out a beta of its “Full Self Driving” software in the United States last month, bringing in lay drivers – who are its customers – to test these safety-critical systems on public roads.

Previously, the National Transportation Safety Board, which investigates accidents and can influence NHTSA with its findings, determined that the driver’s error and the design of the autopilot resulted in an accident involving a Tesla Model S and a fire truck. parked. The NTSB also found that Tesla’s inadequate driver engagement monitoring contributed to a fatal Model X crash that killed Apple engineer Walter Huang near Mountain View, Calif., In 2018.

NHTSA has heard these findings and has the authority to issue recalls, but has not done so with respect to Tesla’s semi-autonomous systems. NHTSA Deputy Administrator James Owen has previously explained: “We don’t want regulations passed long before the development of automated technologies present an unintended and unnecessary barrier to innovation and improved road safety.

A Biden White House could change all of that.