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Tesla might be eligible for $7500 EV tax credits again after the key Senate vote this weekend

Updated: Aug 7

Written by Moneypig Trading Inc. on Aug 5, 2022. Updated on Aug 7th


EV Tax Credits Almost Approved!


Elon Musk tweeted on Aug 4, 2022 (link here):

Senator Manchin is one of the leaders in driving the Inflation Reduction Act, which is a part of the Democrats' reconciliation bill. If the bill is passed, Tesla, General Motors, and Toyota EVs will again be eligible for $7,500 EV tax credits (Sedans with a price equal to or less than $55,000 and SUVs, pickup trucks, or vans with a price equal to or less than $80,000). Used electric vehicles would qualify for a $4000 EV tax credit for the first time.


Sen. Kyrsten Sinema (D-Ariz.), potentially the last hurdle for Democrats, said Thursday that she plans to "move forward" with a revised version of the Democrats' reconciliation bill (news link). On Aug 6, 2022, the Senate already passed the bill (news link). The House plans to vote on the Inflation Reduction Act as the next step around Aug 12, 2022. Since the Democratic Party is the majority in the House, the bill is likely to be passed and gives Tesla another great competitive advantage against its other EV competitors. Hence, this news is expected to be a great catalyst for Tesla's stock price ($TSLA).


Tesla Stock Splitting Again (with dividends this time!)


Another significant catalyst on $TSLA is that Tesla approved the 1:3 stock splitting on Aug 5, 2022, after the market close, allowing more retail investors to afford the stock and hence boost the stock price. The split will be effective on Aug 25, and $TSLA will pay dividends on Aug 24, 2022 with a record date as of Aug 17 (news link).


Tesla Stock Weakness due to Potential Poor China Sales


$TSLA stock price was down almost 7% on Aug 5 so far because


1. The market is anticipating a weak Tesla China July sales number, where the number will come out around Aug 8


2. The hype for Aug 4th annual shareholder event has already been priced in Based on our survey, market participants now expect $TSLA to pop into $1000~$1100 if Tesla EVs are eligible for EV tax credits again. Feel free to vote in our Twitter poll here!



Tesla stock price action:

Currently, $TSLA cannot hold the daily EMA supports 902 & 873, but the uptrend is still intact. If the July 2022 Tesla China auto sales numbers show a decrease YoY, we expect $TSLA would further pull back, any weakness could be bought up fairly quickly. $TSLA might be able to hit $1,000~$1,030 in the next two weeks (lower than our original estimate $1,058). Of course, in the meantime, $SPY $QQQ have to hold, and the US dollar ($UUP) and Ten Year Yield ($TNX) cannot be too strong to nourish a $TSLA rally.



Some Successful $TSLA Trade by Moneypig Trading this Year


1. March 2022:


$TSLA options +1,000%


https://youtu.be/vYui2PnJAzI


2. July 2022 Tesla +250% options swing trading



Disclaimer:

We long $TSLA stocks and own a variety of $TSLA options strategies



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