The Inflation Reduction Act could help Tesla (TSLA) grow into the world’s largest and richest auto company.
The misnamed Inflation Reduction Act extends a $7,500 tax credit for electric vehicles to all new sedans that cost under $55,000 and all new SUVs that cost less than $80,000. These tax credits will begin on 1 January 2023 and extend through 2032.
Hence, the Inflation Reduction Act could boost Tesla (NASDAQ: TSLA) in the USA. They base tax credit eligibility on a vehicle’s manufacturer suggested retail price (MSRP). The 2022 Tesla Model 3 sedan has an MSRP of $46,990, a 2022 Tesla Model Y sport utility vehicle (SUV) has an MSRP of $65,990.
President Joe Biden (D-Delaware) signed the Inflation Reduction Act, a massive spending package that has nothing to do with inflation, on 16 August 2022. The Inflation Reduction Act replaces an older tax credit that only applied to companies that manufactured under 200,000 cars. That credit did not help Tesla, which has made over three million cars.
Is the Model Y the World’s Best-selling car?
Moreover, electric vehicles made outside North America are not eligible for the tax credit. Tesla (TSLA) claims its Gigafactory Texas can manufacture thousands of cars a week. Those vehicles include the Model Y.
Furthermore, InsideEEVs claims Tesla’s factory in Freemont, California, can produce one car a minute or 1,640 cars a day. Freemont production includes 500,000 of Model 3s and Ys, vehicles eligible for the tax credit.
Elon Musk has faith in the Model Y. Musk boasts that the Model Y could become the world’s best-selling car in 2023, InsideEEVs reports. Currently, the Toyota Corolla is the world’s best-selling vehicle. Toyota Motors (TTM) sold 1.15 million Corollas worldwide in 2021.
Tesla’s productive capacities are impressive. Musk claims Tesla had made over three million vehicles on 14 August 2022.
Given these figures, I think Tesla could become the world’s biggest car producer if it can build more factories. Musk wants to build a Tesla Gigafactory in Ontario which could build vehicles that qualify for the tax credit.
How Much Money can Tesla Make?
Tesla (TSLA) is growing at an insane rate without the tax credit. For example Stockrow estimates Tesla’s revenues grew by 41.61% in the quarter ending on 30 June 2022 and 80.54% in the quarter ending on 31 March 2022.
Tesla’s quarterly revenues grew from $11.958 billion on 30 June 2021 to $16.934 billion on 30 June 2022. The quarterly revenues rose to $18.756 billion on 31 March 2022.
In contrast, Tesla’s quarterly gross profit grew from $2.884 billion on 30 June 2021 to $4.234 billion on 30 June 2022. The quarterly gross profit rose to $5.46 billion on 31 March 2022.
Similarly, Tesla’s quarterly operating income grew from $1.312 billion on 30 June 2021 to $2.464 billion on 30 June 2022. The quarterly operating income rose to $3.603 billion on 31 March 2022. Hence, Tesla’s growth and production translate into revenue.
How Much Cash can Tesla Generate?
Tesla (TSLA) is growing at an insane rate without the tax credit. For example Stockrow estimates Tesla’s revenues grew by 41.61% in the quarter ending on 30 June 2022 and 80.54% in the quarter ending on 31 March 2022.
Tesla’s quarterly revenues grew from $11.958 billion on 30 June 2021 to $16.934 billion on 30 June 2022. The quarterly revenues rose to $18.756 billion on 31 March 2022.
In contrast, Tesla’s quarterly gross profit grew from $2.884 billion on 30 June 2021 to $4.234 billion on 30 June 2022. The quarterly gross profit rose to $5.46 billion on 31 March 2022.
Similarly, Tesla’s quarterly operating income grew from $1.312 billion on 30 June 2021 to $2.464 billion on 30 June 2022. The quarterly operating income rose to $3.603 billion on 31 March 2022. Hence, Tesla’s growth and production translate into revenue.
How Much Cash can Tesla Generate?
Tesla (TSLA) can generate enormous amounts of cash. Tesla reported a quarterly ending cash flow of $18.04 billion on 31 March 2022. The quarterly ending cash fell to $847 million on 30 June 2022.
Tesla reported a quarterly operating cash flow of $2.351 billion on 30 June 2022. The quarterly operating cash flow fell from $3.995 billion on 31 March 2022 and rose from $2.124 billion on 30 June 2021.
Tesla’s cash and short-term investments grew from $16.555 billion on 30 June 2021 to $19.209 billion on 30 June 2022. Tesla is now a cash-rich company.
Impressively, Tesla’s debts are shrinking. Tesla had $11.133 billion in Total Debts on 30 June 2021 and $6.665 billion on 30 June 2022. Hence, Tesla’s debts shrank by $4.468 billion in a year.
What Value Does Tesla Offer?
Hence, Tesla offers some value characteristics. Plus, Tesla (NASDAQ: TSLA) is adding value. Tesla’s Total Assets grew from $55.146 billion on 30 June 2021 to $68.513 billion on 30 June 2022.
That growth extends to Tesla’s stock. Mr. Market paid $688.99 for Tesla on 18 August 2021 and $890 on 19 August 2022. Tesla stock hit a high price of $1,222.09 on 5 November 2021.
Tesla is a fast-growing company that offers high value and generates enormous amounts of cash without the US tax credit. I expect more Tesla growth because of the tax credit.
If you are seeking a growing stock, that could profit from the Inflation Reduction Act. I think Tesla is worth a look even at $890. Appealingly, Tesla will split its stock by three on 24 August 2022. That means Tesla’s share price could fall to $296.67 on 24 August 2022.
Tesla could become an industrial powerhouse
I consider Tesla (TSLA) one of the best stocks and one of the best companies in the market. Smart investors need to check out Tesla because Elon Musk’s company could grow into an industrial and automotive powerhouse. Particularly, if new products, such as Tesla’s Optimus robot or Tesla Bot, and the Tesla Semi, work out.
If it works as advertised. I think the Tesla Semi could become the most popular heavy truck in America. Torque News writer Jeremy Johnson claims the Tesla semi could cost 83% less to operate than a diesel-burning truck.
Johnson estimates a 200-mile trip will cost $28 with a Tesla semi. In contrast, Johnson estimates a 200-mile trip in a diesel semi will cost $169.76. If Johnson is right, a 200-mile trip in a diesel truck costs $141.76 more than a similar trip in the Tesla Semi.
I think these economics show how Tesla could dominate America’s semi market. Musk claims they will ship the Tesla this year. Many big companies have ordered the Tesla semi, Futurism claims.
Walmart (WMT), PepsiCo (PEP), Anheuser-Busch, Sysco (SYY), UPS (UPS), DHL, Meijer, Ryder, J.B. Hunt, and Loblaw are among the large companies that have ordered or reserved Tesla semis, Futurism claims.
Other Tesla products could find enormous markets include the Tesla Superchargers, the Powerwall, Commercial Solar, Meagpack and Powerpack, and the Solar Roof. I think Tesla will become an industrial giant that could generate enormous amounts of cash.
All investors need to look at Tesla because this cash-rich giant is about to split its stock.
