The elimination of the $7,500 Electric Vehicle Tax Credit is prompting Tesla's competitors to scale back their EV ambitions, aligning with predictions made by Tesla CEO Elon Musk. Legacy automakers like General Motors, Ford, and Stellantis are reporting financial hits and revising targets amid reduced demand. Tesla, meanwhile, maintains strong sales without heavy reliance on the subsidy.
The recent loss of the $7,500 Electric Vehicle Tax Credit under what has been termed the 'Big Beautiful Bill' is reshaping the U.S. EV market. This development echoes statements from Tesla CEO Elon Musk, who has long argued that subsidies primarily propped up competitors rather than fostering genuine demand.
On Tuesday, General Motors announced a $1.6 billion charge in its upcoming quarterly earnings due to EV investments. In late September, Ford projected that demand for its electric vehicles would be halved without the credit. Stellantis is scrapping its goal of producing only EVs in Europe by 2030, while its Chrysler brand is abandoning ambitious U.S. EV sales targets. These shifts highlight how the subsidy masked underlying challenges in pricing and consumer appeal for non-Tesla EVs.
Musk first addressed the potential impact during Tesla's Q4 and Full Year 2024 Earnings Call in January, stating: “I think it would be devastating for our competitors and for Tesla slightly. But, long term, it probably actually helps Tesla, that would be my guess.” Earlier, in July 2024, he posted on X: “Take away all the subsidies. It will only help Tesla.” He added, “Also, remove subsidies from all industries!”
Tesla's U.S. EV market share has declined from 79% in 2020 to 49% in 2024 as more models entered the market, yet it still commands nearly half of sales. The company recently reported its strongest quarter ever, with deliveries just shy of 500,000 vehicles, suggesting resilience despite the subsidy's end. While Tesla benefited from the credit, particularly in the last quarter, analysts anticipate minimal long-term effects given its focus on autonomy and AI.