The Republican-led Congress has passed President Trump’s legislation, which will significantly impede the adoption of electric vehicles and renewable energy sources in the United States.
The brand-new invoice is poised to significantly impact Tesla’s operations.
Solar energy stocks are plummeting in value right now. SolarEdge is down 20%, and First Solar is down 5%.
Electric vehicle (EV) shares, including those of Rivian and Lucid, have fallen by approximately 2.5% as well.
Tesla operates in each of these markets, with inventory levels rising by 2.5% at the time of this writing.
While some may assume a newly passed US Congressional bill is inherently beneficial to Tesla, this assumption is far from accurate.
The $7,500 electric vehicle (EV) tax credit will soon disappear for many automakers, leaving consumers wondering what’s next.
As previously detailed, the expiration of the EV tax credit in the US has been a significant development over recent weeks.
By the end of 2025, any automaker that has sold more than 200,000 electric vehicles in the United States will no longer be eligible for the tax credit.
Impression on Tesla:
- As the tax credit phase-out approaches at the end of 2025, there may be an initial surge in demand for Tesla, driven by consumers seeking to capitalize on the remaining incentives. However, this boost is likely to be short-lived, precipitating a significant decline in demand starting in 2026.
- While some competitors will still gain access to the tax credit in 2026, a notable exception is Tesla, whose exclusion may hinder its growth.
Annual fee of $250 for electric vehicle owners?
The bill proposes to eliminate the tax credit for electric vehicles, alongside a new $250 annual fee for EVs and a $100 fee for hybrid cars, which they claim will be used to finance highway repairs traditionally funded by gasoline taxes?
Impression on Tesla:
- As a result, this development poses a significant financial burden on Tesla owners, increasing the annual cost of ownership by $250 per distinct electric vehicle proprietor.
- The criticism surrounding the charging infrastructure focuses primarily on its perceived bias towards EV homeowners and consumers, who might abandon the Tesla brand due to its CEO, Elon Musk, previously supporting the Republican Party, which advocated for these policies?
Elimination of Clear Power Credit
The termination of credit for numerous clean power projects is outlined in the latest financial report. It attempts to repeal California’s Zero-Emission Vehicle (ZEV) mandate, a move that may prove challenging.
Impression on Tesla:
- Regulatory credits play a significant role in driving Tesla’s revenue. Notably, Tesla’s gross sales of regulatory credits exceeded its online revenue in the first quarter of 2025. Without regulatory credits, Tesla’s financial performance would be severely impacted.
- The single bright spot lies in the fact that federal authorities seem unlikely to eliminate the CARB credit entirely.
The Department of Energy’s decision to eliminate incentives for photo voltaic and power storage technologies has sent shockwaves through the renewable energy sector. By discontinuing these programs, the department is effectively undermining the growth of this crucial industry.
As the world continues to grapple with climate change, the importance of renewable energy cannot be overstated. In fact, solar power alone has the potential to meet up to 27% of global electricity demand by 2050. The elimination of incentives for photo voltaic and power storage technologies is a step in the wrong direction, threatening to stifle innovation and progress.
Furthermore, these programs have been instrumental in driving down costs and increasing adoption rates. In the case of solar power, the cost of installing a system has decreased by over 70% in the past decade alone. The elimination of incentives could reverse this trend, making it more difficult for consumers to adopt renewable energy solutions.
It is crucial that policymakers recognize the importance of these programs and work to preserve or replace them with new initiatives. The future of our planet depends on it.
The Treasury Department’s new policy eliminates the Investment Tax Credit (ITC) for solar and energy storage systems, effective January 1, 2026. Previously, the ITC offered a 30% tax credit for eligible solar and battery storage systems.
Impression on Tesla
- As Tesla prepares for a decline in demand, the company’s deployment of solar panels and energy storage solutions within the US may take a hit due to anticipated decreased demand in 2026, following the expiration of tax credits.
- While photovoltaics may no longer be a significant focus area for Tesla, the company’s growth in energy storage deployments has become its primary driver of expansion, as electric vehicle deliveries have slowed. As a pioneer in power storage within the United States, Tesla is likely to be disproportionately impacted by the phase-out of the Investment Tax Credit (ITC), which has driven demand for electric vehicles.
Electrek’s Take
These impacts pose significant threats to Tesla’s long-term viability and success. The United States has been Tesla’s most stable and lucrative market to date; nonetheless, this dominance may not persist beyond the next six months.
As the solar and electric vehicle (EV) industries’ shares are aptly responding to the bill’s passage, my theory suggests that this legislation will inherently boost demand for Tesla products in the short term – a factor that no other company can match at present.
Tesla enthusiasts’ optimism has reached a fever pitch, prompting them to envision a future where the company’s autonomous driving capabilities will revolutionize the industry within the next year, rendering it virtually untouchable. Meanwhile, despite admitting to a dire market situation unlike Elon Musk’s optimism, this development could still benefit Tesla in 2025.
In 2026, although, good luck. Will the US EV market finally catch up with global leaders as the industry’s momentum accelerates? The reality of Tesla’s CEO being a significant factor in this situation is indeed astonishing, making it all the more disheartening.
