One of the biggest things that hit electric vehicle giant Tesla (TSLA) hard in the last year or so was the loss of federal rebate incentives for buying electric vehicles. Without free money from the government to cut the prices, many people who might have bought electric vehicles, Teslas included, lost their reason to do so. But in California, there may be a plan to help Tesla out. Investors are skeptical, though, and sent Tesla shares down fractionally in Tuesday afternoon’s trading.
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California Governor Gavin Newsom looks to bring in a new electric vehicle subsidy worth $200 million, designed to encourage drivers to buy in again the way the old federal program did. Though, admittedly, on something of a smaller scale. The program would focus on passenger cars priced at or below $55,000, along with $80,000 for pickups, SUVs, and vans. Used vehicles would get in on the rebate as well if priced at or below $25,000.
California has been considering bringing in some kind of electric vehicle subsidy since 2024, reports note, though the earlier programs mostly left Tesla vehicles out in the cold over pricing issues. The program has since been re-engineered, though, and more Tesla models will be in play. But the rebate will only be available for first-time electric vehicle buyers, reports note, and the exact amount of the subsidy has yet to be determined.
A Much Bigger Tesla?
Meanwhile, with Tesla in the throes of change internally, some are beginning to wonder if Tesla will end up much bigger than it used to be. With SpaceX and xAI set to merge, some are wondering if this merged company will remain a stand-alone company much longer. Some even wonder if Tesla will end up owning both of them.
The idea is valid; Tesla is about to burn through nearly half its available cash on a massive capital expenditure project, and could certainly use a cash cow. SpaceX represents perhaps the biggest such cash cow project around: the Starlink project. With all those Starlink users paying their monthly bills for internet service, it is the kind of cash flow that Tesla itself would welcome.
Is Tesla a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 11 Buys, 12 Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. After a 7.55% rally in its share price over the past year, the average TSLA price target of $393.51 per share implies 6.21% downside risk.
