After passing the Inflation Reduction Act, the federal government now requires that a tax credit for electric vehicles must have 60% of its parts made in the United States, Mexico or Canada, along with final assembly in North America. Manufacturers also have a 200,000 EV tax credit limit (all Tesla cars have hit it). I don’t think high-end car-makers (specifically valuable internal combustion engine vehicles) are going to live in the EV era where purchasers cannot show off the speed and sound typically associated with ICEs. Europe is more welcoming to other EV companies (Chinese ones). Underperforming car manufacturers like Ford might be able to outperform the industry in North America (The world’s single biggest market after China) over the following years, its wait-list for EV pickups already sold out.
Ride-hailing and food delivery companies might be in trouble over the next few months as the Department of Labour proposed to classify these workers as employees of their companies not independent contractors (which they are now). This forces them to pay minimum wage and benefits like insurance, holidays and pension plans. Across the world, some countries have already made the switch like the United Kingdom. Uber is unprofitable and overvalued and could see a spike in operating costs if the change of law happens.
Grocery and food retailers may outperform the market over the next year. An index for food retailers and wholesalers has beaten the broader market over the past year. A raise in interest rates, a spike in low or minimum wages caused by labour shortages will have an impact on prices. For every 1% increase in wages, there was a 2% decrease in operating profit, according to the Economist. Average wages have increased 8.57% in August than at the same time in the previous year. Operating income at Walmart is down 6.8% in July 2022 than in 2021. As borrowing and spending plummet, it could affect its share price, but less so than the general market.
I have no positions in any stocks mentioned in this article.
Sources: https://afdc.energy.gov/laws/electric-vehicles-for-tax-credit
https://www.cnbc.com/2022/10/11/uber-doordash-plunge-as-labor-dept-proposes-gig-worker-change.html
https://finance.yahoo.com/news/ftc-penalizes-uber-delivery-company-115625416.html
Devlin Demontigny 