The Inflation Reduction Act’s new $7,500 tax credit for electric vehicles could be a major tailwind to Tesla stock and the company’s bottom line, contends CFRA analyst Garrett Nelson.
“The signing of the Inflation Reduction Act was the equivalent of ‘Christmas in August’ for Elon Musk & Co., as we peg Tesla as the biggest winner from the new law, as most versions of the industry’s two bestselling EVs (Tesla’s Model Y and Model 3) become eligible for the $7,500 federal EV tax credit effective January 1, 2023,” Nelson wrote in a note to clients. “Previously, all Tesla vehicles had phased out of tax credit eligibility after hitting the 200K units per manufacturer cap.”
Nelson lifted his price target on Tesla’s stock to $1,245 from $1,125, which now assumes a 43% upside from current trading levels. Tesla’s stock is Nelson’s top pick from the auto sector.
The Inflation Reduction Act serves up a $7,500 tax credit to consumers for EVs priced up to $80,000 for trucks and $55,000 for cars. To…