Tesla Stock Could Ride Higher With EV Support in Congress

Tesla (NASDAQ:TSLA) stock would benefit if a proposed deal in the Senate becomes the law of the land.

The government might not be early in supporting the electric vehicle revolution, but it looks like some politicians are definitely on board. Tesla and other EV makers don’t need backing from Capitol Hill right now, but it certainly wouldn’t help.

As we’ll discover, one bill that has been proposed in the Senate would mark a milestone moment for EV manufacturers. In addition, at least one big bank analyst is cautiously optimistic on Tesla’s growth prospects.

What’s Happening With TSLA Stock?

TSLA stock hit a short-term bottom at around $640 earlier this summer before turning around and heading higher. Traders should be aware of long-standing resistance at around $1,100.

We can cross that bridge if and when we get there, though. For the time being, Tesla investors can celebrate the company’s second-quarter 2022 financial results. Impressively, Tesla generated $16.9 billion in quarterly revenue, up 42% year over year (YOY). In contrast, Wall Street’s consensus estimate was slightly lower at $16.5 billion.

Tesla also reported diluted GAAP earnings per share (or EPS) of $1.95 for Q2 2022. The analysts had anticipated $1.81 per share, so there’s another Street beat for Tesla.

It’s hard not to be confident when Tesla is posting these kinds of numbers. In that vein, Morgan Stanley analyst Adam Jonas recently issued an “overweight” rating on Tesla shares along with a $1,150 price target. Jonas cited Tesla’s “estimate beating/self-funding attributes.” The analyst did include a word of caution, however, saying, “Size brings complexity in autos and exposes the company incrementally to macroeconomic and geopolitical risk.”

Senate Deal Could Help Tesla

Meanwhile, there’s a bill supported by Sen. Joe Manchin and Senate Majority Leader Chuck Schumer which could benefit Tesla. This legislative proposal is intended to reduce carbon emissions, among other things.

A main feature of the proposal is a $7,500 federal tax credit for some EV buyers. Furthermore, the bill includes a $4,000 tax credit for the purchase of used EVs. The new and used vehicles would need to be sold at registered dealerships in order to qualify for these tax incentives.

Of course, there’s no guarantee that this bill will become a law in the U.S. Nevertheless, Tesla’s shareholders can root for the government to push for proposals like this, which support the vehicle electrification movement.

What You Can Do Now

Tesla’s great financial results should quell some of the automaker’s critics for a while. Plus, Jonas’ $1,150 price target and “overweight” rating on TSLA stock can encourage some investors to stay the course.

Finally, potential support from the government should make Tesla look even more bullish to its investors. All in all, it’s a good time to consider Tesla as a worthy addition to an EV-friendly watch list.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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