Tesla & Biden: A Good Match With A Touch Of Compromise
Consensus is emerging that manufacturers and suppliers who are focused on green and emission-free technologies, such as electric vehicles (EVs), will benefit the most from a Biden–Harris administration. That is good news for a series of robust Tesla & Biden collaborations. Yeah, sure, there will be a couple of glitches along the way, but Tesla’s advanced positioning in the all-electric and renewable energy markets makes it well-suited to pay off big time when the new US administration takes office.
The Biden-Harris transition website states:
“Biden believes this is no time to just build back to the way things were before, with the old economy’s structural weaknesses and inequalities still in place. This is the moment to imagine and build a new American economy for our families and the next generation.”
The new administration says it has within its grasp the opportunity to build a more resilient, sustainable economy — one that will put the US “on an irreversible path to achieve net-zero emissions, economy-wide, by no later than 2050.” A significant part of that quest will include environmental justice — efforts to not only rebuild, but to consider “where, how, and with whom we build.” The Biden administration is intent on “creating good, union, middle-class jobs in communities left behind, righting wrongs in communities that bear the brunt of pollution, and lifting up the best ideas from across our great nation — rural, urban, and tribal.”
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Tesla is one of the companies being mentioned as having the most positive implications from the Biden victory (others identified include Aptiv, BorgWarner, Ford, General Motors, and Visteon). Tesla is well-positioned to benefit from the Biden-Harris perspective on economic growth, as the company has always had the goal of accelerating the transition to sustainable energy — by integrating energy generation and storage, using innovative engineering processes to scale up ground transportation, and achieving self-driving vehicle autonomy for human safety.
Auto emissions: Collaborating with states, Biden intends to deepen emissions guidelines for internal combustion engine (ICE) vehicles, including a kind of cash-for-clunkers program to prod consumers to make the transition from less-efficient vehicles to more efficient, US-made passenger vehicles.
Tesla started its catalog with the Model S, the first zero-emission, zero-gas, full-size electric vehicle on the market. The US Department of Energy states that Tesla-manufactured vehicles save approximately 5,870,000 gallons of gasoline and prevent 52,000 metric tons of carbon dioxide emissions annually. (Though, that figure is likely out of date, considering how quickly Tesla has been growing.) Who wouldn’t want to trade in a gas-spewing fossil fuel vehicle for a Tesla?
Electric vehicle manufacturing: The Biden administration wants to accelerate US manufacturing and innovation to ensure that “the future is made in America and in all of America.” What would it take to vault ahead of China in EV manufacturing, including supply chains of materials and parts?
In recent years, Tesla has built or started construction on gigafactories in China, Germany, and the US. The US government could help with the goal of accelerating EV manufacturing on national soil with support for construction of another US gigafactory during Biden’s term.
EV tax credit: The Tax Policy Center deduces that Biden will:
“restore the full electric vehicle tax credit, target it to middle-income consumers, and prioritize the purchase of American-made vehicles. We assume the proposal makes the electric vehicle tax credit permanent, repeals the per manufacturer cap, and phases out the credit for taxpayers with income above $250,000.”
Right now, only Tesla and GM have reached the cap, meaning that buyers of Tesla and GM electric cars no longer get a tax credit, while buyers of electric cars from other manufacturers can still get a $7500 tax credit. CleanTechnica editor Zachary Shahan muses that “this is a strange system that penalizes leaders, which makes very little sense.” Biden’s campaign has said that he is likely to seek establishing a $250,000 household-income limit for claiming the credit, and that he’d also aim to reform and extend the tax credit to include companies now excluded. Eliminating language that penalizes Tesla (and GM) for early success with plug-in vehicles is prudent. However, note that this policy change would need to go through Congress, which means approval from the Republican Party if it maintains control of the Senate.
Battery research and development: Increasing battery-related research and development, domestically, is a key for the Biden-Harris administration. Batteries can make EVs more and more affordable as the cost-per-kilowatt equation is dramatically reduced.
Tesla named its manufacturing facilities gigafactories to help people understand that only when operating at a larger economy of scale does EV battery production truly become profitable. Tesla revealed at its Battery Day earlier this autumn that it intends to produce 3 terawatt-hours (TWh) of batteries a year by 2030. That’s more than Benchmark Mineral Intelligence (aka Benchmark Minerals) was forecasting for all lithium-ion battery production combined before Battery Day.
Federal EV fleets: Part of that plan includes replacing the federal government’s vehicle fleet with EVs, so that postal service and other federal vehicles will be zero emissions.
It is really cool to think of federal workers zipping around in Model 3s — or, more likely, tailor-made electric vehicles for mail delivery — and Tesla already has a corporate sales page on its website. Who knows? The Torque News video above outlines how corporate fleets are finding the Tesla Model 3 very appealing already, so perhaps the newest thing will be Tesla & Biden collaborating on US government fleets. As we’ve shown many times before, the more a vehicle is driven, the more the total cost of ownership is going to favor an electric powertrain.
Green energy initiatives: The Tax Policy Center also says that the Biden administration is likely to reinstate the solar investment tax credit. Additionally, it could possibly initiate a tax credit for stationary energy storage products. However, again, this is something that would have to go through Congress.
In its Q3 earnings report, Tesla reported $397 million in revenue from environmental regulatory credit sales, nearly doubling the amount it made from these green credits year-over-year. That marked its 5th consecutive quarter of reported profitability, each one supported by credit sales. Tesla’s storage business deployed 750 MWh in Q3. Tesla’s Solar Roof installations are expanding in the US, are aesthetically pleasing, and are becoming cost competitive in the roofing market. Many of its customers include a Powerwall with their solar installations. Tesla noted in its Q3 earnings update that the production of its Megapack continued to ramp up at Gigafactory Nevada, as production volumes more than doubled in Q3 2020 compared to Q3 2019.
Tesla & Biden: A Few Challenges
Electric vehicle infrastructure: A major plank in the Biden plan is to mobilize US ingenuity to build a modern infrastructure and an equitable, clean energy future. To do so, his administration intends to build out US electric vehicle charging infrastructure by adding at least 500,000 more charging stations.
As Tesla’s Supercharger network is proprietary, this area of a Tesla & Biden collaboration is a wash. However, Tesla could provide useful guidance on how to do this.
Labor: By creating 1 million new jobs in the US auto industry alone, Biden could rejuvenate what has been largely a faltering auto sector over the last decade. Biden also maintains that stronger unions and regulations, ultimately, offer more security to US workers. Some industry insiders say that automakers with largely union work forces would likely be among the biggest winners from tax incentives that would further stimulate the production and consumption of EVs.
As the only US-based automaker without a United Auto Workers (UAW)–represented workforce — and as the occupant of a former UAW-represented plant — Tesla has been a target of several attempts at worker unionization at its factory in Fremont, CA, and its battery plant in Sparks, NV. In 2019, an administrative law judge’s ruling stated the electric-car maker illegally and systematically threatened and retaliated against union supporters within its workforce. Will Tesla acquiesce to unions in efforts to fully embrace a Tesla & Biden relationship? (Writer’s note: Being in a union changed my life.)
Diverse workplace representation: The President-elect and Vice President-elect are committed to building an administration that looks like America.
In 2019, Vice President of HR and diversity & inclusion at Tesla, Felicia Mayo — one of a few black women leaders to break the glass ceiling and rise to executive ranks in a large Silicon Valley tech firm — discussed ways that Tesla integrates diversity into the business at all levels. A 2019 Tesla Impact Report (page 40) shares the company’s approach to diversity:
“One of the many ways Tesla amplifies diversity and inclusion is through employee resource groups led by fellow employees to encourage peers to share ideas, build relationships and take advantage of mentorship opportunities. Our employee resource groups include: Black@Tesla, Intersectionality@Tesla, LGBTQ@Tesla, Teslatinos, Veterans Taskforce, and Women In Tesla. They serve as a resource regarding employee and community issues, ideas and policies and promote a company culture of inclusion, respect and support for everyone.”
Earlier this year, Tesla was ranked 8th among diverse employers in Europe, taking into account all types of backgrounds, beliefs, and abilities. This concerns ethnicity, gender, age, and more. In June, 2020 Tesla’s stockholders delineated goals for workplace arbitration on the prevalence of harassment and discrimination and on employees’ ability to seek redress should harassment and discrimination occur.
Financial regulations: Biden says he will reinvigorate the economy in part by reversing some of Trump’s tax cuts for corporations and imposing “common-sense tax reforms that finally make sure the wealthiest Americans pay their fair share.”
As Elon Musk’s net worth was reported this autumn to be about $115 billion, pushing him past Facebook CEO Mark Zuckerberg on the list of the world’s richest people at that time, he as an individual will probably face these Biden-Harris “common-sense tax reforms.” Musk’s increase in wealth was propelled by Tesla’s dramatic stock gains in 2020, since almost all of his net worth has been in Tesla and SpaceX stock.
Final Thoughts
Barrons sums up a Tesla & Biden relationship by noting that Tesla achieved the place as the “world’s most valuable auto maker” through solid basic business execution — “by expanding production, not to mention increasing its sales and earnings even during the pandemic.” The Biden policies as a whole will benefit Tesla — as well as other green-energy stocks. Fun times are ahead.
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