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Well, EVs were a theme again for Super Bowl ads this year, but this time it was notable for their absence, their lack of representation as automakers moved away from promoting electric vehicles during the big game. Uh, the ad that we're showing for Jeep had Harrison Ford touting the variety of choices people had, not just EVs, but gas-powered vehicles as well. It was a symbol of America in that ad. For more on the EV industry, we're bringing in Stephen Jengaro, next-gen transport analyst at Stifel. And Stephen, we noticed this trend during the Super Bowl as sort of emblematic of the bigger sort of cultural shift that we have seen on electric vehicles. And I'm just curious what you make of that, and you know, how sales in the industry are going to be when we're seeing sort of that kind of a shift.

Yeah, so we've seen a slowdown clearly in adoption rates in the US market, but I will point out 2024 was still a year of pretty solid growth, uh, for EV sold in the US market, but there's definitely been a pivot and a pause, I think, in the sort of pace of the growth rate on the EV side. And now, as you kind of move into the Trump administration, we're all trying to sort through and kind of understand what the what the regulations are going to look like and what the vehicle tax credit may or may not look like as we move forward.

Uh, Stephen, what specifically about the Trump administration's decision to halt federal funding, Stephen, for new EV charging stations? I'm I'm interested how that kind of decision ripples through your coverage universe, what it means for the broader industry.

Yeah, it's a very good question. I mean, first, when you think about, you know, EVs, you have a little bit of this chicken and egg issue, right? Where it's hard to sell EVs if the charging infrastructure is not there and people are worried about, you know, the vehicle's range and where they're going to charge it. Uh, it's particularly true as you get into sort of this next wave of EV adoption where, you know, maybe it goes beyond, uh, the purchaser who can simply charge their vehicle at home. So, any slowdown in in a build out of of the infrastructure, particularly on these long-distance corridors, it is going to have a ripple effect and likely lead to a slower pace of EV sales.

Where does this leave, Stephen, the pure-play EV makers versus the OEMs, the traditional automakers that are still making, you know, the sort of range of vehicles?

It's a very interesting situation because when you think about the $7,500 vehicle tax credit, let's assume that that goes away, right? The only company making money selling electric vehicles is Tesla. Uh, if you remove the vehicle tax credit, it makes it even harder for legacy OEMs to gain traction, start selling cars and actually improve those profit margins per vehicle. So in an odd way, even though you may see a slower adoption rate with the removal of the of the $7,500 tax credit, it probably helps the underlying market share of of Tesla. So that's that's how we sort of think about the way the the universe plays out here, uh, over the next 12 to 18 months as we sort of digest the changes.

Stephen, let's talk some specific names here in Tesla. It's interesting, Stephen, I saw you recently published a new note there. And bottom line to your clients, you said, listen, obviously, a lot of moving pieces with this name, but you maintain the buy, Stephen.

So when we look at Tesla, uh, the huge value driver here is going to be their ability to get unsupervised FSD approved, get vehicles on the road, which they expect to see in in Texas this year, and then ultimately that underpins this large robo taxi opportunity. So we think about the valuation of Tesla, yes, some of the headwinds, the EV sales are negative short term, and we reflected that in our in our new numbers and our price target. You know, came down modestly because of the sort of the core EV sales in the near term. But the reality here is as you look at the value of Tesla over the next nine months, 12 months, two, three years, it's really going to be driven by how successful they are getting unsupervised FSD to work and then how that drives, you know, the upside in in vehicle sales and ultimately the robo taxi business.

Um, I just want to drill down a little bit, though, onto what they do now. Still the bulk of their business is selling cars. So just focusing on the current period, how much of a political headwind are they seeing? Not just the general EV sales slump, I mean, at least anecdotally online, you see a lot of complaints about Elon Musk specifically. I've even seen calls for not just boycotts, but demonstrations at Tesla dealerships because of his involvement in the administration. Is that at what point is that material to Tesla sales?

So, I'm fortunate to work at a firm that has a think tank group that helps provide a lot of pretty detailed information about topics like that. And we actually published in our in our weekly this morning or last night technically, the favorability rating of Tesla. And we have seen the net favorability rating of Tesla fade to close to its its lowest level, uh, in in existence of the data, which I think speaks to your point, which is because of the polarizing CEO right now and how he's politically engaged with Trump administration and with the uh, efficiency efforts, I think it is causing a a big, uh, a big problem with the uh, with the near-term sales and just sort of the the the impact that has on people's willingness to buy a Tesla. And I would just actually just add to that, when we think about the data similar from the same group, we see a much higher willingness of people who identify as Democrats versus Republicans to buy EVs. We thought as given Elon's uh, involvement with Trump administration, you could start to see that shift, and it may actually be shifting where there's more Republicans with the removal of a mandate who aren't being forced to buy these things to maybe buy a Tesla. But it's probably more than offset right now in the near term at least by sort of this, uh, you know, view of Elon from from some of his detractors.

What do you make, Stephen? There's some financials. Some of your colleagues have come on. They cover Tesla as well, who who and they have a buy opinion on the name. And one reason they seem to have a buy is because of the relationship that Musk has with Trump and the way they think that kind of that perhaps Trump can sort of foam the runway on certain initiatives, maybe like the regulatory backdrop for self-driving cars. What do you make of that argument?

I I'm glad you brought that up because if if we actually rewind, I mean our overall sort of thought process has been yes, near-term EV sales are probably hurt a bit, uh, but when you think about the regulatory path to full self-driving, which is again the very large value creator for this company, I think Elon Musk's involvement in the organization probably paves the path to full self-driving and kind of clear regulations more rapidly. So I think that's actually a much bigger underlying positive than some of the short-term headwinds, uh, on the EV sales front. I think that's ultimately what drives the stock higher and why we have the buy rating on the stock.

Stephen, always good to see and have you on the show. Thanks so much for joining us. Appreciate it.

I appreciate it. Thank you both.