The promulgation of the "Chip Act" has set off a rising tide in the A-share semiconductor sector, and the entire sector has risen by 14.18% last week. Following the Chip Act, the United States is expected to usher in the enactment of another major bill.
At the end of last week, the U.S. Senate voted on the budget settlement process for the 2022 Inflation Reduction Act, which passed by a 51-to-50 vote, and the last House vote will be held this weekend.
If the House of Representatives passes this bill, perhaps the market will set off a small climax.
1
As the third largest growth market for new energy vehicles in the world, the Penetration Rate in the United States is still at a low ebb, despite its early start-up development.
In the first half of 2022, the sales volume of new energy vehicles in the United States was 441,000 units, and the penetration rate in June was only 6.25%, while the average penetration rate of new energy vehicles in China and Europe in June was much higher than that in the United States.
？ The penetration rate in the United States has reached a bottleneck and has not been able to have explosive growth, which is also due to the fact that many car companies in the United States have touched the subsidy threshold.
In 2009, the U.S. Congress set a subsidy threshold of 200,000 vehicles.
Tesla reached that threshold before July 2018 and sold more than 200,000 units in the fourth quarter of 2018. Therefore, tesla and general new energy vehicles are currently in a state of no subsidy, and Toyota and Ford are only one step away from the 200,000 mark.
The subsidy ceiling policy has become a tight curse on the development of new energy vehicles in the United States, if it cannot be cancelled, the North American market is expected to become a pure market drive in the next 1-2 years, which undoubtedly curbs the development of the North American new energy vehicle market, so the mainstream car manufacturers in North America have jointly called on the authority government to cancel the 200,000 subsidy ceiling.
Based on this, Biden introduced the "BBB" bill (Build Back Better) in 2021, intending to support the development of the electric vehicle industry.
The BBB Act, as a comprehensive policy, is extremely broad. The bill spends $1.75 trillion, of which $555 billion is spent on clean energy and climate investments.
For the field of new energy vehicles, the 3B bill abolished the upper limit of the subsidy threshold of 200,000 vehicles for car companies, changed to the subsidy after the penetration rate of electric vehicles reached 50%, and increased the previous $7,500 tax credit to a maximum of $12,500.
However, due to the large expenditure, this bill will increase the financial burden of the United States to a certain extent, so it will not end well.
2 Relay of the Inflation Reduction Act
The old don't go, the new doesn't come. The failure of Bill 3B to pass did not extinguish the ambitions of the Democratic Party of the United States, and on July 27, 2022, the Inflation Reduction Act of 2022 was introduced.
The bill would invest $369 billion in energy and climate change projects over the next decade, with the goal of reducing carbon emissions by 40 percent by 2030, making it the most significant investment the United States has made in areas such as future energy security, reduced development costs, job creation, clean energy solutions, and more.
To put it bluntly, this is the largest climate investment bill the United States has ever had.
Compared to the BBB bill, the Inflation Reduction Act 2022 further reduces spending in all aspects and increases the share of clean energy investment.
First, the bill's total spending is $739 billion, a $1.01 trillion cut from Bill 3B, of which $369 billion is spent on clean energy investments, compared to $181 billion from Bill 3B.
Second, there is no additional subsidy of $5,000 in addition to $7,500 for U.S. auto workers and U.S.-made electric vehicles.
At present, major securities believe that the "2022 Inflation Reduction Act" is more likely to land.
Then, once the subsidy ceiling is relaxed, as Tesla and GM re-enter the subsidy list, the US new energy vehicle market will usher in another climax.
Of course, even though Manchin, the biggest "thorn" of the Democratic Party, has agreed to the bill, many people in the United States still believe that the bill is difficult to effectively reduce inflation.
The nearly $740 billion bill will raise money through the imposition of a 15 percent corporate minimum tax rate, prescription drug pricing reforms, the State Revenue Service's enhanced enforcement and the elimination of "loopholes" in carrying interests.
U.S. Senate Republican Leader McConnell slammed the bill, saying Democrats crushed American families with historicly high inflation, and now they want to raise taxes sharply, which would hit workers and reduce thousands of jobs.
3 Two positive directions
The advent of the Chip Act, although it gave China's chip industry a big blow, but the strengthening of the logic of domestic substitution has set off a rising tide in the semiconductor sector, and semiconductor ETFs rose by 15.40% last week.
The "2022 Inflation Reduction Act" is undoubtedly good for new energy.
In terms of automobiles, if the bill is successfully passed, Tesla, GM and other car companies will regain subsidies to stimulate the growth of electric vehicle sales in the United States, which is good for related enterprises that have entered the US battery industry chain. There are currently 9 battery ETFs on the market.
(The content of this article is a list of objective data and information and does not constitute any investment advice)
It is worth noting that according to the original text of the Inflation Reduction Act 2022, the tax credit is expected to be increased to 30% and extended until 2033, reduced to 26% after 2033 and 22% in 2034.
At the same time, the bill mentions that it will provide $9 billion to encourage the development of clean energy, mainly to support the photovoltaic manufacturing industry in the United States and greatly stimulate the growth of photovoltaic installed capacity.
If you look at it from the perspective of photovoltaic emissions in the United States, it is also good for China's photovoltaic industry chain, especially branches with a high proportion of exports. There are currently 9 ETFs for the PV industry on the market.
Pacific Securities believes that:
Under this stimulus, the US domestic photovoltaic industry is still affected by labor costs, technology accumulation, and unbalanced development of the industrial chain, and it is difficult to form effective production capacity in the short and medium term, and overseas integrated production capacity will be preemptive and is expected to continue to enjoy a premium.
This article is derived from the ETF evolutionary theory