Welcome to Electrified, it's your host Dylan Loomis, quick shout out to my newest patron Lucas S. Thank you for choosing to support the channel. This has been on my mind lately so I wanted to take a quick second just to thank each and every one of you that has ever interacted with or tried out any one of the sponsors of the channel. It really does go a long way in ensuring that the time I spend on Electrified is viable for my family and I, so seriously in the most sincere way possible, thank you. Over the past 24 hours there has been a shocking amount of this and disinformation out there when it comes to the supposed EV mandate. So we're going to clear all of this up and talk about how it may impact Tesla.
Last night at the RNC Donald Trump said I will end the EV mandate on day one saving the US auto industry from complete obliteration which is happening right now and saving US customers thousands and thousands of dollars per car. Now honestly there's a chance that not even Trump knew what specific regulation he was talking about with that statement but I'm very confident that that EV mandate is separate from the EV tax credits. These are two very different things. The regulation that Trump was likely talking about was this the new EPA emission standards that we got earlier this year.
An important thing to note here these emission standards are not new these have been around now since the early 2000s. The truth is referring to these new emission standards as a mandate is not accurate. These new rules encourage EV deployment but are technology neutral and don't actually require automakers to sell them. The EPA stuck to their tradition of setting performance-based standards essentially setting an emissions target or limit on how much pollution on average is allowed from the new vehicles manufacturers. So the lower the average the more changes manufacturers need to make either by improving their gasoline and diesel vehicles or by increasing sales of lower emission tech like plug-in hybrid or full be the flexibility in the standards means that we don't know for certain how many EVs manufacturers will make.
There's a cacophony of people out there right now that are saying the federal government is mandating that 56% of cars must be EV by 2030 and that's just not true at all. In reality that number is just a projection of how these new standards may actually play out. If manufacturers comply with the standards as EPA estimates they might we could see battery electric vehicles make up as much as 30 to 56% of sales between 2030 and 2032. Simply put there are new emission targets that do need to be hit but automakers have a lot of options on how they actually get to those numbers. Smaller cars making combustion engines more efficient plug-in hybrids fuel cells full be EV etc.
Now separate from all of that which is at the federal level we can move down to the state level where there actually are some EV mandates in place. In California they've adopted the advanced clean cars to regulations which means all new passenger cars trucks and SUVs sold in California will be zero emission by 2035 and it's true that there are currently between 10 and 15 other states that have already decided to follow California's lead on this one. Could Trump come after California and some of these other states? I think anything's possible but it seems unlikely.
That's because California has had a Clean Air Act in place since 1970. The provision requires the US EPA to grant California permission to set its own clean air standards as long as the state can show that its proposed standards are at least as protective of public health and welfare as applicable federal standards and that the state needs those tighter standards to meet compelling and extraordinary conditions. I'm not a lawyer so I'm not going to go any further as I'll be waiting out of my depth. However Trump was likely talking about the new emission standards that don't really have an EV mandate and then separately at the state level where there are actual EV mandates it's not clear if Trump can actually come after those.
I also think it's somewhat ironic because any person living in the United States should actually want these new emission standards because ultimately it will mean we all get to breathe cleaner air and not only that but we get to buy more efficient vehicles with our money. But sadly because the truth gets packaged up politically into EV mandate bad then most people end up having no idea what's actually going on and they just repeat talking points that they have no idea are actually super misleading. Personally I'm going to steer way clear of saying that I think Trump would be good or bad for Tesla because it's a super nuanced conversation.
The truth is nobody has any idea how this is all going to unfold and if Trump wins it's likely going to be some good for Tesla and some bad and weighing it at this point is nearly impossible. However it's absolutely worth pointing out a potential risk to Tesla's margins when it comes to the inflation reduction act and specifically the tax credits both on the production side and on the consumer side. Last year on Tesla's Q2 call Zach Kirkhorn said for the IRA manufacturing incentives we provided previous guidance that we expect these to be for the course of this year in the range of 150 million to 250 million per quarter. So on the high end for the full year this number would have been around $1 billion just for the manufacturing incentives for 2023 which means that could be the number again for 2024 if not even slightly higher. As a reminder the $45 per kilowatt hour manufacturing tax credit has two parts. One part of that is $35 per kilowatt hour for domestic battery cell production and then the remaining $10 per kilowatt hour is for domestic battery pack assembly. The word has been now for a while that Tesla is splitting that $45 per kilowatt hour with Panasonic in Nevada for 2170s but Tesla would get the full credit for the 4680s made in Texas for the Cybertruck. And then if Tesla is still assembling the cells from CATL for the powerwall and megapack they would get $10 per kilowatt hour for all of that. So that's where the roughly $200 million per quarter would be coming from. And you also have to factor in the tax credit on the consumer side so just for 2023 in the US there were 1.2 million EVs sold, Tesla had 55% of that market. Just for quick back of the napkin math we'll call that 650,000 sales for Tesla in the US last year. Now let's say that 50% of those sales actually qualified for the IRA tax credit. Multiply that figure by 7500 per sale gives us $2.4 billion for the year divided by 4 quarters, roughly $600 million per quarter. So again this is not analysis but just some rough numbers to get us in the ballpark. Tesla's total gross profit for 2023 was $17.6 billion. About $1 billion of that would be from the manufacturing tax credit and then you can call it roughly 2.5 billion from the consumer tax credit. Doing the math that means in 2023 roughly 20% of Tesla's gross profit actually came from IRA tax credits. On X Elon said again a surprising number of people think Tesla survives on subsidies that's true of our competitors but not of Tesla. It's absolutely true that Tesla does not need these subsidies Tesla will survive without them but to say that taking them away would be beneficial to Tesla I think is a stretch. In that scenario Tesla either has to lower the prices of their vehicles and give up some margin or keep the prices where they are and likely sell less vehicles.
And I understand why people make the argument it's because the competition needs those subsidies more than Tesla. That's also very true. In case you haven't noticed Tesla is still really only competing against itself so Tesla's profitability in my opinion is a lot more important than all of the competition making even less money without those subsidies on EVs. Just in case this all wasn't confusing enough already you know those regulatory credits that Tesla earns and it's why people talk about Tesla's auto gross margin X credits well those specifically are separate from everything we were just talking about. Just be careful out there because a lot of people are throwing around the words mandates and credits but the question is what exactly are they talking about. We all know politicians are excellent at making promises they don't actually keep but for what it's worth Trump did say that he was open to Chinese EV makers actually building their cars in the US. He also said if those Chinese EV makers set up shop in Mexico and then plan to import them into the US that Trump would slap them with up to 200% tariffs. But important to note Trump apparently is open to Chinese EV makers making their cars in the US using US labor. How realistic is that latter point though I would say not very. Just so everybody knows there have already been some legal attempts from auto makers and energy players trying to repeal these new emission standards. Then when you layer in the recent chevron ruling that is actually supposed to limit some of the power of organizations like the EPA and NHTSA.
All of that to say there is a fair amount of uncertainty out there it may linger for the next one to two years so I just want everybody to be aware. Some of you have been asking me when energy sage was going to be available in your state well the time has finally come as energy sage has now expanded to all 50 states. In their press release they said for over a decade energy sage has been at the forefront of promoting clean energy and energy saving solutions providing a platform for consumers to comparison shop and save on rooftop solar. It has evolved to provide energy storage heat pumps, EV chargers and community solar. Energy sage makes it easy to transition to clean energy. Consumers can easily request multiple high quality quotes from vetted and accredited solar HVAC and electrical installers. The process is free, simple and frictionless through its in-depth resources and unbiased support. I've talked to people at this company multiple times as I was looking into solar for our home. Just remember anything clean energy if you have questions you want somebody to talk to you want somebody to help you find people in your specific area energy sage is the place to go. No energy sage does not sponsor the channel but I did ask them for an affiliate link at the very least because I plan to keep talking about it for a while as I found it to be helpful so it'll always be linked below if you want to check them out.
Late last night cyber security company crowd strike pushed an update that was apparently defective and many many different companies and their windows systems were down. Elon said we just deleted crowd strike from all of our systems so no rollouts at all. There are reports that Tesla halted some production lines in Texas and Nevada due to the global IT outage. Tesla told its staff this morning it's currently experiencing an outage with windows hosts servers laptops and manufacturing devices where users are seeing a blue screen on their devices. Elon replied to Alex saying unfortunately many of our suppliers and logistics companies use it and replying to a post about this story Elon said does anyone ever get fired anymore. Replying to Satya Nadella Elon said this gave a seizure to the automotive supply chain. Hopefully this turns out to be a short lived and small disruption for Tesla and many of its suppliers but we'll keep an eye on it in the days ahead.
Sawyer shared the promotions that Tesla is currently running in the US and you may see Tesla did bring back 1.99% Model Y financing if you take delivery by September 30th. Tesla also sent out an update saying to enable additional Model 3 performance and Model X all wheel drive vehicles to qualify for the tax credit we're offering complimentary paint options for Model 3 performance and the seating layout options for the Model X all wheel drive. For a limited time customers can choose one of these options for free when FSD is added to your order. Additionally all trim levels of the Model S and X in the US were increased by $2,000 which yes is an interesting choice because all indications have been pointing to Model S and X demand being relatively weak. This is the US page for the Model S but just for you Canadians the Model S and X have been bumped up in price. In Canada the Model X went up $3,000 for both trims and then for the S the all wheel drive went up $6,000 and the plaid went up $2,000. And to show you for the Model 3 performance typically the paint colors still are an upcharge but if you add FSD to your order then for now all paint color options are included with FSD. And for the Model X again when you add FSD all seating layout options including the 6 and 7 cedars are also included to keep these vehicles eligible for the credit.
UK developer Harmony Energy has begun construction on France's biggest battery storage facility. The 100 megawatt so roughly 300 to 400 megawatt hour project will use Tesla's Megapack and be able to power 170,000 homes for two hours. This facility is on the site of an old power station that burnt fossil fuels for more than 30 years. Construction has already started with a battery system due to be connected to the grid in the summer of 2025 and ready to be fully operational by the end of next year. This project could be up to a 100 megapack order for Tesla. According to an internal email it shows that Anaheim police officers want to be the first in the country to have law enforcement branded cyber trucks. It said I spoke with the chief yesterday and we still want to be the first police agency to have a cyber truck if anyone can make that happen I know it's you. They said the cyber truck could be used at parades or community events to start conversations with the public though he noted the high price point of the armor like vehicle. Speaking of the cyber truck there was some video footage of meek mill showing off his and I just wanted to say if I were to have a cyber truck this would be the aesthetic I go for some form of matte black with black wheels.
Keeping tabs on the health of the overall auto market so far in 2024 car repossessions are up 23% compared with the same period last year reposs started ticking up last year and have now surpassed pre pandemic levels up 14% compared to the first half of 2019 between inflation higher credit card debt more expensive housing interest rates for new cars being over 7% and over 11% for used cars we kind of knew this was going to happen still. Ants paid $191 million in civil penalties for failing to meet us fuel economy requirements for 2019 and 2020 and they still owe another $460 million in outstanding penalties the COO of Ford just told auto car that their plans to go all electric in Europe by 2030 were too ambitious he said Ford maintaining a flexible powertrain offering is crucial and a new multi energy platform currently in development for European cars will be vital in case you haven't picked up on it already all of these CEOs saying that we're going to give our consumers freedom of choice what it really means is that the demand for their electric vehicles is not at all where they were expecting it to be and that they're also losing more money on fully electric vehicles than they were anticipating originally there's still plenty of disinformation out there about this Elon clarified this note is false I have not pledged anything to anyone this in response to Elon giving $45 million per month to a Trump super PAC that is not true he said I did create a PAC that's focused on supporting candidates who favor a meritocracy and personal freedom but funding to date has been far below that level there are so many people saying Elon's giving millions of dollars to Trump a guy who hates electric vehicles none of that is accurate Elon just said he has not given money to Trump and it's not that Trump hates EVs in that speech last night he actually said he supports EVs again though it's the mandate whatever he actually meant that he does not support Tesla stock closed the day at $239.20 down 4.02 percent while the Nasdaq was down 0.81 percent it was a lower volume day for Tesla trading about 22 million shares below the average volume the past 30 days hope you guys have a wonderful and a safe weekend please like the video if you did you can find me on x linked below and a huge thank you to all of my patreon supporters.