Electric vehicle maker Tesla has been one of the hottest stocks on the market over the last year, with a share price that climbed more than 700 percent in 2020 and a recent move onto the S&P 500. The stock is so hot, in fact, that the coldest state in the country has increased its investment in Tesla.
Alaska’s Department of Revenue raised its stake in Tesla by a huge margin during the 2020 fourth quarter, buying 124,654 shares of the world’s top EV company to bring its total investment to 126,754 shares, according to filings with the U.S. Securities and Exchange Commission. The department, which collects and invests public funds, managed nearly $9 billion in U.S.-traded assets at the end of last year. The higher stake in Tesla came during the same quarter that the Department of Revenue lowered its investments in Intel, Gilead Sciences, and Qualcomm.
Alaska is an outlier among U.S. states in terms of investing public money in the stock market, but it’s also unique in another respect: It is the only state in the country with no income or sales tax. Most of its state revenue comes from oil taxes and royalties, and federal funding. Investment earnings, which provide a third source of revenue, are handled by the Alaska Permanent Fund. That fund pays for the annual dividend that Alaska residents get each year – something else other states don’t have.
The department’s willingness to bet on Tesla is understandable. Shares of the company have been trading above $700 this month after selling for less than $135 a year ago. The massive leap in value helped make CEO Elon Musk the world’s richest person. Tesla’s market value moved past $800 billion earlier this year. Some market watchers reckon its value could soon top $1 trillion.
Tesla has become such a big player on Wall Street that it was added to the S&P 500 in December, giving it a spot on one of the world’s most important stock-market gauges and a major benchmark for large-cap U.S. stocks. As part of the S&P 500, Tesla shares should get even more attention from money managers and index funds, which often gauge their own success against how well they perform against the index.
Meanwhile, Alaska has taken a big step forward by investing in an electric vehicle company that competes directly with the state’s long-running oil and gas industry. Alaska’s crude oil reserves totaled about 2.7 billion barrels at the beginning of 2020, ranking it fifth among the states.
Alaska government leaders, like those elsewhere, clearly see growth opportunities in the EV market. That market recently got a shot in the arm when Congress passed a widely supported, bipartisan led coronavirus relief package at the end of last year that heavily invested in clean energy initiatives. Additionally, President Joe Biden also announced numerous measures to specifically accelerate EV adoption, including a plan to deploy 500,000 new electric public charging stations across the country by 2030.
The 500,000 new chargers would represent at least a five-fold increase in the existing infrastructure, according to an article on the CleanTechnica website. It cited the Department of Energy’s estimates that there are currently about 90,000 individual chargers at 28,000 charging stations nationwide. The Biden plan should provide more than half of the country’s charging needs by 2030, and spur the sale of as many as 25 million electric vehicles.