Why Biden Targeted Tesla?
$Tesla Motors(TSLA)$ fell 5% on the 9th, although the drop is not significant for the company. There were two main reasons for this:
1. $HSBC Holdings PLC(HSBC)$ analyst downgraded Tesla to "sell" with a target price of 146 (vs. current price of 205), but the market may not buy into HSBC's influence on Tesla.
2. Biden supported the United Auto Workers (UAW) targeting Tesla and Toyota. This news was already reported a few days ago. Although workers' interests should be protected, UAW's actions have become more politically significant than practical.
Why does Biden have a problem with Tesla?
1. Musk did not give him money, and he does not pay as much tax (relatively).
2. Tesla's headquarters moved from California (a Democratic stronghold) to Texas (a Republican stronghold), with lower taxes and support from Republican leaders.
3. Nevada is a swing state (with unstable votes), and next year's election will give the Gigafactory employees there some goodwill.
As for Toyota, they are just making money from foreigners.
However, I believe that this will not have a significant impact on Tesla.
1. Tesla has high auto-manufacturing process, and Musk is very strict on cost control.
2. The local governments in Nevada and Texas will try to stablize Tesla.
3. Tesla does not have the same pension structure as $General Motors(GM)$ and $Ford(F)$ so even if salary rise, the impact on the overall balance sheet is not significant.
Of course, this does not mean that Tesla's stock price will not fluctuate because it is already a highly volatile stock.
The Q3 financial report highlighted the industry-wide problem of declining profit margins and insufficient demand, and Tesla's sharp tug-of-war around $200 (up or down $30) may continue for some time.
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