What happened
Shares of electric vehicle (EV) stocks were rising this morning after Senator Joe Manchin said he would support the Inflation Reduction Act of 2022, which includes expanded tax credits for electric vehicles.
As a result, shares of Tesla (NASDAQ: TSLA) were up 2.2%, Nikola (NASDAQ: NKLA) spiked 9.2%, and Lordstown Motors (NASDAQ: RIDE) popped 6.7% as of 11:26 a.m. ET.
So what
Investors were optimistic today that EV companies might benefit from the Senate's Inflation Reduction Act of 2022 bill after Senator Manchin indicated that he would vote for it. Manchin had been one of the last holdouts of the bill that Democrats are trying to pass.
Image source: Getty Images.
The Senate could vote as early as next week on the bill, in which case it would then need approval by the House, which could vote on it in early August.
EV investors have been watching news of this bill closely because there are a few benefits for EV companies, including keeping the current federal tax credit of $7,500 for EVs and removing a tax credit cap for carmakers after they've reached 200,000 vehicles sold.
There could also be a new federal tax credit of $4,000 for used EVs, according to reporting by Electrek.
Tesla, Lordstown, and Nikola investors were optimistic today that lawmakers will eventually pass the bill and send it to President Biden's desk to be signed.
The EV industry has relied on tax incentives to lower the cost of buying electric vehicles, which can be very pricey. And with inflation and supply chain issues causing EV production costs to rise, these incentives are arguably more important for the industry than ever before.
Now what
EV investors are processing a flurry of news this morning. In addition to news of the bill, The Wall Street Journal reported last night that EV maker Rivian Automotive is laying off 6% of its workforce in order to cut costs.
Additionally, new economic data reported today showed that U.S. gross domestic product (GDP) fell for the second straight quarter, which is a common definition used to indicate that the economy is in a recession.
Despite the layoff and economic news, it appears that Tesla, Lordstown, and Nikola investors are focusing their attention on the potential for the Inflation Reduction Act of 2022 to help boost EV sales in the near future.
And while it could end up doing just that, investors should likely anticipate more share price volatility for these stocks as the market continues to process shifting economic data.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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