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Tesla stock rallies as US boosts EV tax credit and China sales jump amid price cuts

Elon Musk in front of a Tesla
Elon Musk in front of a TeslaGetty
  • Shares of Tesla climbed Friday on news of an expanded EV tax credit and a spike in China sales.

  • The Treasury Department broadened its definition of SUV, allowing more models from Tesla and other carmakers to qualify for EV tax credits.

  • Meanwhile, Tesla's sales in China jumped last month amid recent price cuts.

Tesla stock climbed on Friday on news of a wider US tax credit for electric vehicles and a sales spike in China.

Shares jumped as much as 5.7% to an intraday high of $199, continuing a rally that has seen Tesla surge 60% so far this year.

Under the Inflation Reduction Act, SUVs can cost up to $80,000 to qualify for EV tax credits. But cars, sedans and wagons must cost less than $55,000.

Previously, EVs like the Tesla's Model Y, GM's Cadillac Lyriq, Ford's Mustang Mach-E and Volkswagen's ID.4 didn't qualify for EV credits because they fell short of the Treasury Department's weight requirement under its definition of an SUV.

But on Friday, Treasury broadened its definition of SUV, allowing more models from Tesla and other carmakers to qualify for EV tax credits that can reach up to $7,500 per car.

Tesla CEO Elon Musk had criticized the Treasury's prior standards, which allowed some cars that were not fully electric to qualify while some fully electric cars did not.

Meanwhile, Tesla sold 55,796 vehicles in China in January, according to data published Friday by the China Passenger Car Association.

That's up 18% from December and 10% from a year ago. The spike comes as Tesla slashed that price of cars in China last month by 6% to 13.5% on certain models. Tesla sales also remained strong despite the lunar new year holiday slowing consumer activity.

After slowing production in December, the company plans to boost output at its Shanghai plant in the next two months as the price cuts spur more demand, sources told Reuters.

Read the original article on Business Insider