Why the proposed end of EV tax credits could actually be a big win for Tesla
That’s because vehicles assembled in America might be getting their own tax break.
The $7,500 federal tax credit for electric vehicles will likely be out by year’s end, according to a markup of a proposal by the House Ways and Means Committee published yesterday that’s expected to be incorporated into President Trump’s “one big, beautiful bill.”
That would seem like bad news for electric vehicle makers, who rely on the credit to subsidize some of the higher price of purchasing EVs, but maybe not as much for Tesla.
When asked about how rolling back the Biden-era tax credits might affect his company during an earnings call last July, CEO Elon Musk said something sort of incomprehensible:
“I guess there would be like some impact. But I think it would be devastating for our competitors and would hurt Tesla slightly. But long term, probably actually helps Tesla, would be my guess.”
He didn’t explain why that might be, but he might actually be right.
Tesla buyers are less likely than other EV owners to say they wouldn’t have made their purchase without the federal tax credit, according to survey data of EV owners by insurance comparison website Insurify this year. While more than half of Toyota EV owners said so, only about a third of Tesla owners did.
Additionally, the proposed legislation introduces a tax deduction for car loan interest for passenger vehicles assembled in the US, which is the case for Tesla. That could save typical car buyers on average $4,500 over the course of their loan, depending on the car they buy and the interest rate they get. (Or, conversely, much less than that.)
Of course, the same goes for Bezos-backed Cybertruck competitor Slate Auto, which like Tesla is also set to be assembled in the US. Unlike Tesla, its starting price of less than $28,000 is relatively affordable to begin with, even without the tax credit.
Tesla, however, has much bigger problems than the federal tax credit reversal, like slowing demand — as evidenced by declining sales, a week-long labor pause, and confirmation from Tesla employees themselves.
