Tesla pops after news that the tax credit for electric vehicles may be extended
- Tesla stock rises on news that lawmakers have proposed an extension of the electric vehicle tax credit.
- The extension, which is backed by GM and Tesla, may face opposition from the Trump White House.
- Watch Tesla trade live.
Tesla opened up more than 2% following a report that a group of lawmakers, both Democrats and Republicans, are seeking to extend the federal electric vehicle tax credit.
The electric vehicle maker's $7,500 tax credit began winding down under current legislation as Tesla exceeded the 200,000 limit cap in 2018. By year-end 2019 the tax credit will expire completely.If passed, the proposed legislation, the "Driving America Forward Act," would extend the vehicle cap to 600,000 at a rate of $7,000. Senators Debbie Stabenow (D), Gary Peters (D), Lamar Alexander (R), Susan Collins (R) and Representative Dan Kildee (D) sponsored the legislation, according to Reuters.
In addition to the electric vehicle extension, the bill would also extend the hydrogen fuel cell credit. The total cost of the legislation is expected to top $11 billion with a cost of $10 billion for the EV credit extension.
The bill has the backing of a wide variety of automakers with Tesla and GM having lobbied for an extension of the credit for over a year. Despite this, the legislation may face significant opposition as the Trump administration floated plans in March to roll-back the credit entirely.
Tesla has faced a volatile 2019 with demand issues for the Model 3 driving concerns that profitability of the company may continue to suffer. These concerns have overshadowed more positive announcements such as the introduction of the $35,000 Model 3 and the unveiling of the Model Y crossover.
Tesla shares are down 18% year to date.