To The Moon

$Tesla Motors(TSLA)$President Biden will sign legislation for the $430 billion climate, health and tax bill on Tuesday that will eliminate electric vehicle tax credits for most models currently getting up to $7,500 effective. The bill restructures the existing $7,5000 new EV tax credit and creates a new $4,000 rebate for used EVs. It also includes tens of billions of dollars in new loan, tax credit and grant programs for automakers to build cleaner vehicles.

Sourcing requirements will take effect on January 1st, and the electric vehicles have to be assembled in North America and parts sourced only from countries with free trade agreements with the United States.

The Alliance for Automotive Innovation, which represents automakers producing nearly 98% of cars and light trucks sold in the U.S., believes 70% of electric vehicles currently sold in the U.S. would be ineligible for the tax credits upon passage of the bill.

Tesla and General Motors $General Motors(GM)$previously hit the 200,000 cap and are nolong able to receive such tax credits, but starting next year, they will be eligible once again, but under stricter sourcing and income rules.

This will help increase demand and drive salesfor made in America electric vehicles. As Lucid and Rivian currently still get these tax credits, it is unlikely to boost their sales for them. 

Vehicles from other EV startups such as Lucid's pricey Air sedan and Fisker's forthcoming Ocean, which is set to be imported from Austria, automatically wouldn't qualify for the new credits.

Rivian, which began producing electric pickups and SUVs last year in Illinois, has characterised the bill as pulling "the rug out from consumers considering purchase of an American-made electric vehicle."

James Chen, Rivian's vice president of public policy, told Crain's Chicago Business that the proposed regulations would favor automakers such as Tesla and GM, which have had longer to ramp up production or do some manufacturing overseas.

Tesla has rallied strong last Friday and continued into Monday as Tesla bulls are anticipating the removal of tax credits will increase demand for the EV maker. This is in addition to the 3-for-1 stock split for Tesla at the start of trading on August 25th next week. A stock split is like dividing $1 into 2 fifty cent coins, the total value remains the same. Tesla holders willget additional 2 shares for every 1 share they own, and the trading price will be divided by 3, which is roughly around $300 per share assuming the closing price of $900 at the end of trading on August 24th. The "cheaper" price willattract more retail investors will smaller portfolios sizes.