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Tesla CEO Elon Musk.
Patrick Pleul – Pool/Getty Imagess
Tesla CEO Elon Musk is sparring with the Biden administration again, giving investors already tracking new models, new capacity, and new features another issue to consider.
The friction started when President Joe Biden appeared to snub
Tesla
(ticker: TSLA), the world’s biggest maker of electric vehicles by far, during a ceremony to announce his administration’s EV goals in August. People from
General Motors
(GM) and
Ford Motor
(F) attended as the president said he hopes to have electric vehicles account for 50% of new car sales by 2030.
Musk tweeted that the decision to exclude Tesla was odd.
Musk took a shot at Biden more recently for not congratulating his space company, SpaceX, for launching four civilian astronauts into orbit and bringing them safely home. The first orbital mission crewed by nonprofessional astronauts drew praise from all corners, except the Oval Office.
Union representation appears to be the main reason that Biden might be ignoring Musk. Tesla doesn’t employ unionized labor in its only functioning U.S. plant, in Fremont, Calif. And the current version of Biden’s $3.5 trillion infrastructure bill has an extra tax credit for EVs made in unionized shops. That would disadvantage Tesla vehicles, a little, versus those made by Ford or GM.
For investors, the EV tax credits are easy enough to understand. More tax credits for others would be a bad thing for Tesla, although buyers of Tesla’s haven’t qualified for federal EV credits for a couple of years. Under current rules, credits aren’t available if a company has sold more than 200,000 EVs in the U.S.—a milestone Tesla has already passed.
Another government-relations issue for Tesla is the rollout of more sophisticated versions of its autonomous-driving software. Many auto makers offer driver-assistance features such as adaptive cruise control and lane-keeping assistance, but Tesla has been more aggressive, with a push into features that go further toward a fully self-driving vehicle.
The National Highway Traffic Safety Administration has expressed concern about Tesla’s plan to expand driver-assistance tools that have been used on the highways for use in cities. “Basic safety issues have to be addressed before they’re then expanding it to other city streets and other areas,” Jennifer Homendy, the new head of the NHTSA, said in an interview with the The Wall Street Journal. Ms. Homendy also expressed doubts about how Tesla software is tested on public roadways.
The agency could, in theory, slow the rollout of Tesla’s full self driving system, or limit its functionality. NHTSA and Tesla didn’t immediately respond to requests for comment.
All the current systems, including Tesla’s, require drivers to keep their eyes on the road at all times.
The success or failure of full self-driving mode will affect the stock. Regulatory concerns are the last things investors want to have to track. The company is set to open two new plants and deliver its new light-duty truck in coming months.
Coming into Monday, Tesla stock was up about 8% year to date, trailing behind the 18% and 13% comparable, respective returns of the
S&P 500
and
Dow Jones Industrial Average.
Shares gained 743% in 2020.
Write to Al Root at allen.root@dowjones.com