Tesla Inc. TSLA researcher Troy Teslike sees three possibilities for the $7,500 tax credit currently available on the purchase of new electric vehicles once Donald Trump swears in as President on Monday.
What Happened: According to Teslike, Trump may choose to restrict the reach of the tax credit, making it apply to less number of EV models or less number of potential customers by changing the eligibility criteria.
The President-elect could instead also restrict eligibility criteria immediately and announce that Congress will cancel the tax credit in six months, Teslike said.
However, according to Teslike, it would be ideal for EV adoption and Tesla deliveries this year if Trump instead chooses to leave the eligibility criteria of the tax credit untouched while announcing that he wants Congress to cancel it within 6 months.
The last option, where the eligibility criteria are left untouched, will give potential buyers time to make their Tesla purchases while utilizing the tax credit. This will allow the company to make up for the drop in sales during the second half of the year once the tax credit is dropped, Teslike opined.
Why It Matters: In November, Reuters reported that President-elect Donald Trump‘s transition team is planning to kill $7,500 tax credit available on EV purchases. The report also noted that Tesla representatives expressed support for ending the subsidy to the team.
“In my view, we should end all government subsidies, including those for EVs, oil and gas,” Tesla CEO Elon Musk then said.
During Tesla's second-quarter earnings in late July, Musk also said that the impact of the elimination of subsidies would only be slight for Tesla but devastating for its competitors. The elimination of EV subsidies would probably help Tesla in the long term, he added.
Teslike, however, is of the opinion that the loss of tax credit will only make Tesla lose its market to gas cars from luxury car brands.
“Tesla competes with gas cars from BMW, Mercedes, Porsche, and Audi. Therefore, without the tax credit, Teslas will effectively be $7,500 more expensive compared to those cars,” Teslike said in November.
Tesla reported global deliveries of 1.79 million vehicles in 2024, down from full-year deliveries of 1.81 million in 2023.
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