At 3 pm ET today, President Joe Biden is expected to discuss his EV plans with GM, Ford, and Chrysler’s European parent Stellantis, in a White House meeting. The administration’s comprehensive plan includes increased tax credits for automakers, 500,000 additional charging stations, support for the battery supply chain, and a myriad of other incentives. A proponent for revolutionizing America’s car manufacturing industry, Biden has called for $174 billion in government spending to meet these sustainability goals. In exchange, automakers such as GM, Ford, and Stellantis are making a voluntary pledge to make at least 40% of their new vehicle sales electric by 2030 while also working to reduce greenhouse gas pollution.

In keeping with the administration’s two-pronged approach to employment and progress, the United Auto Workers (UAW) union will be standing shoulder to shoulder with the President and automakers. Biden has made jobs a central tenet of not only his administration but also his campaign. Routinely emphasizing blue-collar jobs and union solidarity, as a candidate he vowed to be “the most pro-union president you’ve ever seen,” and now he seems to be delivering. 

President Biden’s pointed inclusion of the UAW is taken by some, as a signal to new EV startups whose workforces are generally not unionized. Since April, the UAW has spoken of  “laying the groundwork” to organize factory workers building electric vehicles. Startups like Rivian, Faraday Future, Karma Automotive, and Lucid Motors, have overall followed Tesla’s lead in forming non-unionized workforces. This was hit home by UAW’s President, Ray Curry, who spoke in favor of Biden’s plans for EV production while emphasizing the importance of, “preserving the wages and benefits that have been the heart and soul of the American middle class.”

Despite the UAW’s presence at the White House meeting, recent unionization efforts have been unsuccessful. Tesla, in particular, exemplifies unions’ struggles with EV manufacturers and its exclusion from the President’s EV meeting is unlikely a coincidence. In Travis County Texas, the UAW is actively campaigning to “Hold Tesla to its Promises”, hoping to influence a vote on public funding for TESLA’s new plant. Considering that the UAW also represents Aerospace workers, its beef with TESLA may go even deeper than EV manufacturing.  

Whether Tesla was snubbed from the EV meeting or not, Biden’s plans only boost its financial outlook. As the leading, American EV manufacturer, Tesla has already cornered the market. In the case of a consumers’ tax incentive Tesla is particularly well-positioned. Its competitive edge, brand identity, and emphasis on future affordability means Tesla is too well established for major disruption. While the administration’s proposal of almost $200 billion in spending over eight years will likely give Tesla’s competitors a boost, analysts are already adjusting their outlooks in anticipation of Tesla’s additional growth. Undoubtedly, the announcement is a catalyst for America’s EV industry which has lagged behind its foreign counterparts for far too long.  

Based on this influx of government support and enforcement of green performance standards, I would expect an improved outlook for recently listed EV startups and the EV sector more generally. Although Tesla appears to have been singled out in this instance, it remains a long-term, solid investment. In my opinion, investors can expect Tesla to emerge unshaken from the added competition. However, its quarterly earnings may be affected if the Biden administration revokes Tesla’s current federal subsidies to encourage competition. 

Over the years it appears Tesla has benefited from some $3.39 million in Federal grants and tax credits in addition to $466 million from Federal loans, loan guarantees, and bailout assistance. Yet in reality, most of this has been repaid with interest well before the deadline and the company’s quarterly outlook routinely surpasses expectations – proving its financial solvency. Still, if this speculation were correct and Tesla was cut off from federal government assistance, it’s usually stellar financial performance could experience a brief setback. In any case, this would only be a small hiccup for a company whose loyal investor/consumer base continuously buoys its stock performance. 

From the labor perspective, Tesla and EV’s like it may have to adapt to meet the needs of automotive unions. While this is purely speculative, the apparent emphasis on labor’s role in the EV revolution may require greater cooperation from Tesla than it has traditionally displayed. Still Tesla’s CEO, Elon Musk, has wide-ranging connections and although his company SpaceX is independent of Tesla, it has a good relationship with the federal government thanks to its close cooperation with NASA. 

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