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A U.S. appeals court on Friday rejected a legal challenge to the Federal Communications Commission’s (FCC) 2020 decision to shift much of a key spectrum block set aside for auto safety to accommodate the burgeoning number of wireless devices.

The Intelligent Transportation Society of America and the American Association of State Highway and Transportation Officials last year brought a legal challenge in the U.S. Court of Appeals for the District of Columbia seeking to reverse the FCC's reallocation of 60% of the 5.9 GHz band spectrum block.

The spectrum block was reserved in 1999 for automakers to develop technology to allow vehicles to talk to each other to avoid crashes but has so far gone largely unused.

NCTA – The Internet & Television Association said the decision "is an enormous victory for American consumers" that "enables that important 5.9 GHz spectrum to provide consumers with even more reliable high-speed Wi-Fi and access to next-generation automotive safety applications."

The groups that challenged the FCC decision did not immediately comment Friday.

In 2020, the U.S. Transportation Department said the FCC plan was "a particularly dangerous regulatory approach when public safety is at stake."

FCC Chair Jessica Rosenworcel said the decision "upholds the FCC's broad authority to manage the nation's airwaves in the public interest ... Today's decision recognizes that by allowing this spectrum to evolve we can advance newer safety technologies and grow our wireless economy."

The FCC voted to shift 30 megahertz of the 75 megahertz reserved for Dedicated Short-Range Communications (DSRC) to a different automotive communications technology called Cellular Vehicle-to-Everything, or C-V2X, while moving the other 45 megahertz to Wi-Fi use.

Automakers opposed the split on safety grounds, while major cable, telecom and content companies say the spectrum is essential to support growing Wi-Fi use.

Government studies have suggested the technology, if widely adopted among U.S. vehicles, could prevent at least 600,000 crashes annually.

In December 2016 the Obama administration proposed requiring all new cars and trucks to eventually include DSRC, but the Trump administration never finalized the rules.

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The U.S. House of Representatives will vote Friday on a $430 billion bill to fight climate change and lower prescription drug prices, in what Democrats view as a major political win for President Joe Biden ahead of November's midterm elections.

Democrats say the legislation will help reduce the federal deficit, cut domestic greenhouse gas emissions, allow Medicare to negotiate lower drug prices for the elderly and ensure corporations and the wealthy pay the taxes they owe.

Titled the "Inflation Reduction Act," the measure passed the Senate along party lines on Sunday after a marathon, 27-hour session. House approval would send the bill on to the White House for Biden to sign into law. A vote on passage was expected on Friday afternoon.

"House Democrats will pass and send to the president the landmark Inflation Reduction Act," House Speaker Nancy Pelosi, the chamber's top Democrat, predicted this week in a letter to her party colleagues.

"This bill makes a tremendous difference at the kitchen table of America's families," Pelosi said.

Republicans oppose the legislation, warning that it will kill jobs by raising corporate tax bills, further fuel inflation with government spending and inhibit the development of new drugs.

Business groups have had a mixed reaction to the bill, which offers the prospect of higher tax bills for some companies while at the same time giving protections to the fossil fuel industry.

The bill's main revenue source is a novel 15% corporate minimum tax aimed at stopping large, profitable companies from gaming the Internal Revenue Service code to slash their tax bills to zero.

Investors looking to pour cash into clean energy products can expect at least a decade of federal subsidies through long-term tax credits for wind and solar and new credits for energy storage, biogas and hydrogen. Developers who use U.S.-made equipment or build in poorer areas will find additional support.

But the bill does not leave the U.S. fossil fuels industry out in the cold. Some provisions allow the federal government to authorize new wind and solar energy developments on federal land only when it is also auctioning rights to drill for oil and natural gas.

A $7,500 tax credit to encourage U.S. consumers to buy electric vehicles could not be used for most EV models on the market, according to major automakers, who warn that the legislation will put achieving U.S. EV adoption targets for 2030 in jeopardy.

To be eligible for the credit, vehicles must be assembled in North America, which would make some current EVs ineligible as soon as the bill takes effect.

The bill has been more than 18 months in the making. It represents a final version of Biden's original sweeping Build Back Better plan, which had to be whittled down in the face of opposition from Republicans and key legislators from his own party.

Democrats, who have been weighed down for months by inflation and Biden's anemic job approval numbers, hope the legislation will help them at the polls in November, when voters decide the balance of power in Congress ahead of the 2024 presidential election.

Biden himself plans to travel across the country to tout the bill along with a series of other legislative victories as a win for voters and a defeat for special interests.

Republicans are favored to win a majority in the House in November and could also take control of the Senate.

But in a hopeful sign for Democrats, Biden's public approval has risen this week to its highest level since early June, as a result of recent legislative successes, according to a Reuters/Ipsos opinion poll.

The two-day national poll found that 40% of Americans approve of Biden's job performance, a level of support that is historically low for a U.S. president but up from his rock-bottom level of 36% in May.

In addition to the Inflation Reduction Act, Biden has gained momentum from legislative wins aimed at boosting U.S. competitiveness against China and expanding healthcare benefits for millions of veterans exposed to toxic burn pits.

About half of Americans -- some 49% -- support the climate and drug pricing legislation, including 69% of Democrats and 34% of Republicans, according to a Reuters/Ipsos poll conducted Aug. 3 and 4. The most popular element of the bill is giving Medicare the power to negotiate drug prices, which 71% of respondents support, including 68% of Republicans.

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Climate change is exposing the tragedy of undervaluing resilience, ignoring systemic risks, and not investing up front. Changing consumer preferences and new climate policies mean that businesses need credible transition plans that show how they will seize opportunities in the transition to net zero—or, put simply, they will cease to exist.

Finance has a pivotal role to play by building considerations of climate risk into decision-making, and increasing the flow of capital to assets and investments that are best positioned to mitigate the worst effects of climate change. But, in order to achieve this, the markets need high-quality, decision-useful information from companies to drive capital allocation decisions.

The bedrock for disclosures is the framework created by the Task Force on Climate-Related Financial Disclosures, or TCFD. It was set up by the Financial Stability Board, with Mike Bloomberg as chair. As the leader of the task force, I helped develop its disclosure recommendations. They rest on four pillars: governance, strategy, risk management, and targets and metrics.

Investors, banks, insurers, and pension funds responsible for assets of $155 trillion have endorsed or adopted the TCFD recommendations. They are demanding that companies assess the risks and opportunities that climate change poses to their business models and disclose this information appropriately. Many companies are responding. The latest status report shows that over 40% of companies with a market capitalization greater than $10 billion disclosed in line with TCFD recommendations in 2019.

This shows good progress, but not enough. Full disclosure against all of the task force’s recommendations is still rare. Disclosure of the potential financial impact of climate change on companies’ businesses and strategies is limited, and progress in building consistency remains uneven.

Global momentum is building to make climate-related disclosures mandatory. More than 110 regulators and government organizations around the world support the TCFD. The most ambitious are already enshrining it in regulation and law, with the European Union, the United Kingdom, New Zealand, Switzerland, and Hong Kong leading the way.

Governments should publish road maps to show which authorities will be responsible for turning the TCFD recommendations into reporting rules and the timeline to make them mandatory. The EU and the U.K. have published excellent examples.

To avoid fragmentation, national and regional efforts must be complemented at the international level. The International Financial Reporting Standards Foundation, or IFRS, which sets many worldwide accounting rules, is consulting on the demand for global sustainability reporting standards and how it might contribute to their development. This includes a promising proposal for a new Sustainability Standards Board.

The EU is also leading a robust exploration of standard setting for ESG disclosure. The European Commission’s International Platform on Sustainable Finance, launched in 2019, is playing a key role. Platform members represent 16 jurisdictions, half of the global population and gross domestic product, and 55% of greenhouse gas emissions, and the majority have already set mandatory regulatory requirements for climate disclosure. The U.S., notably absent from the discussion to date, has the opportunity to build on these efforts and participate in the development of standards that are being sought by investors and corporations globally.

The U.S. accounting standards setter, the Financial Accounting Standards Board, in coordination with the IFRS, is well placed to pursue climate-risk disclosure standards for three reasons. First, the IFRS has developed global accounting rules that are used in over 140 countries, and the FASB has a record of standard setting for the world’s largest capital market. Second, given that climate and financial interests are inextricably linked, there is an opportunity to bring standards on sustainability and financial reporting together. Third, building on significant work in the private sector, the two institutions can assure a globally coordinated approach based on the TCFD framework.

Global standard-setting is needed, and quickly. Now that the U.S. government is certain to fully engage on a climate agenda, the SEC and the FASB should help drive the effort for global climate-risk disclosure standards.

Market participants are unified in their desire for global standards. Public sector co-ordination—across geographies and sectors—is instrumental to agreeing on a common set of international standards. And, with domestic and regional standard-setting initiatives now well under way, it is now or never for a global solution.

It falls to leaders of all kinds—political, financial, and corporate—to support the efforts to create internationally consistent, comparable, and decision-useful reporting that the financial system needs. The key institutions and jurisdictions need to align. With the TCFD as the foundation for climate-related risk disclosure, we will work toward a more resilient global economy and be better placed to achieve a net zero future.

Mary Schapiro, the former chair of the Securities and Exchange Commission and the Commodity Futures Trading Commission, leads the secretariat for the Task Force on Climate-Related Financial Disclosures, is vice chair of the Sustainability Accounting Standards Board, and is the vice chair for global public policy at Bloomberg.

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Tesla posted its first full year of net income in 2020 -- but not because of sales to its customers.

Eleven states require automakers sell a certain percentage of zero-emissions vehicles by 2025. If they can't, the automakers have to buy regulatory credits from another automaker that meets those requirements -- such as Tesla, which exclusively sells electric cars.

It's a lucrative business for Tesla -- bringing in $3.3 billion over the course of the last five years, nearly half of that in 2020 alone. The $1.6 billion in regulatory credits it received last year far outweighed Tesla's net income of $721 million -- meaning Tesla would have otherwise posted a net loss in 2020.

"These guys are losing money selling cars. They're making money selling credits. And the credits are going away," said Gordon Johnson of GLJ Research and one of the biggest bears on Tesla (TSLA) shares.

Tesla top executives concede the company can't count on that source of cash continuing.

"This is always an area that's extremely difficult for us to forecast," said Tesla's Chief Financial Officer Zachary Kirkhorn. "In the long term, regulatory credit sales will not be a material part of the business, and we don't plan the business around that. It's possible that for a handful of additional quarters, it remains strong. It's also possible that it's not."

The 11 states which will require a certain percentage of cars to be zero emission vehicles, or the automakers to purchase credits from a company like Tesla which has exceeded the target, are California, Colorado, Connecticut, Maine, Maryland, Massachusetts, New York, New Jersey, Oregon, Rhode Island and Vermont.

Tesla also reports other measures of profitability, as do many other companies. And by those measures, the profits are great enough that they do not depend on the sales of credits to be in the black.

The company reported 2020 adjusted net income, excluding items such as $1.7 billion stock-based compensation, of $2.5 billion. Its automotive gross profit, which compares total revenue from its car business to expenses directly associated with the building the cars, was $5.4 billion, even excluding the regulatory credits sales revenue. And its free cash flow of $2.8 billion was up 158% from a year earlier, a dramatic turnaround from 2018 when Tesla was burning through cash and in danger of running out of money.

Its supporters say those measures show Tesla is making money at last after years of losses in most of those measures. That profitability is one of the reasons the stock performed so well for more than a year.

But the debate between skeptics and devotees of the company whether Tesla is truly profitable has become a "Holy War," according to Gene Munster, managing partner of Loup Ventures and a leading tech analyst.

"They're debating two different things. They'll never come to a resolution," he said. Munster believes critics focus too much on how the credits still exceed net income. He contends that automotive gross profit margin, excluding those sales of regulatory credits, is the best barometer for the company's financial success.

"It's a leading indicator," of that measure of Tesla's profit, he said. "There's no chance that GM and VW are making money on that basis on their EVs."

The future of Tesla

Tesla's lofty stock performance -- up 743% in 2020 -- makes it one of the most valuable US companies in the world. Yet the 500,000 cars it sold in 2020 were a sliver of more than 70 million vehicles estimated to have been sold worldwide.

Tesla shares are now worth roughly as much as those of the combined 12 largest automakers who sell more than 90% of autos globally.

What Tesla has that other automakers don't is rapid growth -- last week it forecast annual sales growth of 50% in coming years, and it expects to do even better than that in 2021 as other automakers struggle to get back to pre-pandemic sales levels.

The entire industry is moving toward an all-electric future, both to meet tougher environmental regulations globally and to satisfy the growing appetite for EVs, partly because they require less labor, fewer parts and cost less to build than traditional gasoline-powered cars. "Something most people can agree on is that EVs are the future," said Munster. "I think that's a safe assumption."

While Tesla is the leading maker of electric cars, it faces increased competition as virtually every automaker rolls out their own EVs, or plan to do so. Volkswagen has passed Tesla in terms of EV sales in most of Europe. GM said last week it hopes to shift completely to emissions-free cars by 2035.

"The competition is rendering Tesla's cars irrelevant," said GLJ' Resarch's Johnson. "We do not see this as a sustainable business model." Other analysts contend Tesla's share price is justified given how it can benefit from the shift to electric vehicles.

"They're not going to stay at 80-90% share of the EV market, but they can keep growing even with much lower market share," said Daniel Ives, a technology analyst with Wedbush Securities. "We're looking at north of 3 million to 4 million vehicles annually as we go into 2025-26, with 40% of that growth coming from China. We believe now they are on the trajectory that even without [the EV] credits they'll still be profitable."