What happened

Shares of Tesla (NASDAQ:TSLA) popped on Monday, nearing their all-time high. As of 12:06 p.m. EST today, the stock was up 6.7%.

The gain follows a report that House Democrats are considering a bill that would reinvigorate the federal tax credit for buyers of electric vehicles.

Tesla Model S, Model 3, and Model X

Tesla Model S, Model 3, and Model X. Image source: Tesla.

So what

The new draft energy tax package by the Ways and Means Committee, promoted by Congressman Mike Thompson, a California Democrat, would extend the federal electric-vehicle (EV) tax credit.

The current federal tax credit starts to phase out when a manufacturer has sold 200,000 EVs in the U.S. -- a target both General Motors (NYSE:GM) and Tesla have hit. The revised credit would begin phasing out for a manufacturer after a total of 600,000 EV sales. But the full credit would be reduced from $7,500 to $7,000.

This would put qualifying buyers of Tesla and General Motors EVs back in the game to benefit from the full credit.

Now what

While the bill, called the Growing Renewable Energy and Efficiency Now (GREEN) Act, could boost demand for Tesla and General Motors EVs, investors shouldn't count on it until it has officially been passed.

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