This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
What happened
Tesla (NASDAQ: TSLA) shares have dropped more than 10% over the last two weeks, despite potential tailwinds from the Inflation Reduction Act (IRA) being signed into law. That is partially due to how the competition will also benefit from incentives included in that legislation. This morning, Tesla shares fell as much as 2.1%, and remained down 0.3% as of 2:10 p.m. ET.
So what
The downtrend has coincided with announcements from several traditional automakers that are taking advantage of what the IRA offers for electric vehicle (EV) manufacturing in the United States. Earlier this week, Honda announced plans to build a new $4.4 billion EV battery factory in the U.S. Today, Toyota said it would also be investing about $5.3 billion to add battery production capacity in the U.S. and Japan.
Now what
Battery production from Toyota's newly announced investment should start between 2024 and 2026. It should result in enough battery capacity to power roughly 500,000 EVs. Perhaps most notable is the move from one of the early hybrid vehicle trailblazers into fully battery electric versions. Toyota sold about 2.6 million hybrids worldwide in 2021, according to a Barron's report, but only 14,000 vehicles powered solely from batteries. Plug-in hybrids like Toyota's Prius run on both battery power for shorter distances and traditional gasoline engines.
To qualify for the IRA's incentives, companies must maintain a minimum level of manufacturing and supply within the United States. Honda and now Toyota appear to be trying to take advantage of those by integrating more battery facilities with their existing manufacturing in the U.S. That has some Tesla investors thinking that there may be more competition for U.S. EV consumers than previously expected.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
