Elon Musk had a pretty good year; 2020 saw Tesla (NASDAQ: TSLA) have a meteoric rise by overcoming pandemic losses and reaching new heights, Musk is now the richest man in the world worth $185 billion dollars, and he even welcomed a new baby into his family. Tesla is slated to continue this upward trajectory in 2021, but this time, it’ll have to do so in a new environment.
After highly contentious elections, Joe Biden won the 2020 election, and the Democrats managed to win in Georgia giving them control of the Senate. Combined that with the already Democrat-controlled House of Representatives, the Democrats now control the Legislative and Executive branches, the first time this has happened in a decade, and this is important because some high profile Democrat politicians are pushing for the Green New Deal, a proposal that will help many different industries including the electric vehicle industry.
An uptick in inflation would be "happy news", it would coincide with a roaring bull market and soaring consumer confidence – the best environment for Tesla to achieve record growth.
This reality of observed Tesla growth could counter any longer term inflation worries.
— 𝗧𝗲𝘀𝗹𝗮 𝗙𝗮𝗰𝘁𝘀 🔋 (@truth_tesla) January 10, 2021
Now the question is: how will a Democrat-controlled federal government affect Tesla’s growth?
A Game of Politics
For those unaware, the Green New Deal is a proposed bill to address climate change and economic inequality by calling for the federal government to wean the United States off fossil fuels and slow down greenhouse gas emissions, while also guaranteeing new high-paying jobs in clean energy industries. The resolution was written by Representatives Alexandria Ocasio-Cortez of New York and Edward J. Markey of Massachusetts. The bill was dead in the previously Republican-controlled Senate, and the Trump administration was known to deny the existence of climate change.
This political changes impact Tesla because the company relies on government incentives to do business. The fact is the story of Tesla isn’t one of rugged individualism; they got a lot of help from federal and state governments in the form of consumer incentives and government subsidies. Plus when Tesla announced the Cybertruck, cities and states tripped over themselves for the opportunity to host the vehicle’s factory with Austin, Texas winning the bid.
Tesla has also stated its intent to change its business model.
The Battery Day Announcement
On September 22, 2020, Tesla held Battery Day, which is their annual stockholder meeting and Elon Musk told people that “It’s incredibly important that we accelerate the advent of sustainable energy….[and] accelerating the time to sustainable energy.” Tesla announced its battery manufacturing methods will change by bringing more battery manufacturers to the U.S., pledging to start mining lithium in the United States using a more environmentally friendly process, and with regards to cobalt, the company said it hopes to phase out the material.
Cobalt is used as an ingredient in electric vehicle batteries but is associated with abusive child labor practices, which is why Tesla wants to do away with it.
The above video is a condensed version of the Battery Day meeting. It’s 16 minutes.
The Bigger Picture
I think it’s important the United States gets on electric vehicles now. America may be ahead of the game now, but given the passion China has for electric vehicles, it’s imperative that American companies gain the upper hand now.
The economic benefits that can come from the Green New Deal should not be ignored, and granted, there are things to scrutinize on the proposal, but I think that the benefits far outweigh the negatives.
My 14-year-old son, Saxon, said he feels like 2021 will be a good year. I agree. Let us all make it so.
— Elon Musk (@elonmusk) January 9, 2021