What happened
Tesla (TSLA -3.55%) shares have dropped more than 10% since President Biden signed the Inflation Reduction Act (IRA) into law in mid-August. But one analyst thinks investors are missing an opportunity thanks to incentives in the new law. That call helped move Tesla stock as much as 2.1% higher today. As of 1:18 p.m. ET, the stock held on to a gain of 0.8%.
So what
Wolfe Research analyst Rod Lache upgraded shares of Tesla to a buy rating today, and said he thinks shares are worth $360, according to Barron's. Lache previously rated shares a hold, and his price target implies upside of 33% over Friday's closing share price.
Image source: Tesla.
Now what
The analyst thinks the IRA will be a catalyst to more quickly boost EV penetration in the U.S. The law contains incentives for consumers to receive tax credits when buying EVs, with certain restrictions that include retail price and adjusted gross income. But one restriction it removed was the credit that ended for vehicles bought from manufacturers once that company sold more than 200,000 electric vehicles.
Tesla had long ago crossed that limit, but now some of its vehicles will once again qualify for tax credits for buyers. Lache previously estimated EVs would represent 10% of new car sales in the U.S. by 2025, but now thinks that will be 20%.
With Tesla shares down double-digits since that legislation was signed into law, the analyst thinks now is a good time to buy the stock. Not all of Tesla's models will qualify for a $7,500 tax credit, but buyers can include the $55,000 retail car price limit and other restrictions into their decision-making process. The bottom line should be more EVs on the roads over the next several years, and that should be good news for the industry leader.
