The "Inflation Reduction Act of 2022," which would come up for voting in the Senate this week seeks to better incentivize clean energy vehicles with more U.S. content.
Morgan Stanley analyst Adam Jonas on Monday laid out his case that Tesla is the most "American" car company.
Data Points Vouch For Tesla's Americanness: Tesla's U.S. sales are 62% manufactured in U.S./Canada, based on fiscal-year 2021 model-year data from the American Automobile Labelling Act, the analyst said. Honda Motor Company Ltd (NYSE:HMC) and Stellantis NV (NYSE:STLA) are ranked second and third, with the proportion of U.S./Canada manufactured vehicles sold in the U.S. making up 55% and 46%, respectively, he added.
Source: Morgan Stanley
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Secondly, Tesla dominates the U.S./Canada-made EV market, Jonas said. The company has roughly two-thirds of the share of the U.S. EV market year-to-date and more than 90% of the share of battery EVs, the analyst noted. Tesla has a minimum of 50% U.S./Canada manufacturing share, he said.
Jonas noted that Nissan Motor Company Ltd's (OTC:NSANY) Leaf came in at 35% U.S/Canada manufacturing share followed by Ford Motor Company's (NYSE:F) Mustang Mach-E, which is assembled in Cuautitlan, Mexico.
"As Tesla continues to lead the industry in localizing battery/cell manufacturing in Texas and other US states (forthcoming) we would expect to see Tesla's US share of production value further increase materially over time," Jonas said.
Domestic Battery Supply Chain Warranted: The analyst called for a greater emphasis to be placed on rebuilding an on-shore renewable battery material supply chain versus demand stimulus. The current U.S. EV market, according to the analyst, is characterized by high demand relative to supply.
"Tax breaks for demand may exacerbate the issue and could represent a wealth-transfer from US taxpayers to largely foreign battery firms and Chinese dominated battery material processing," he added.
Jonas has an Overweight rating on Tesla shares and a $1,150 price target.
Price Action: Tesla closed Monday's session down modestly at $891.83, according to Benzinga Pro data.