As Elon Musk begins to acknowledge, even if only tacitly, that President Trump’s administration is poised to severely impact Tesla’s prospects by scrapping incentives for battery and solar power without offsetting measures to curtail support for fossil fuels.
The unexpected decision by Elon Musk to support Donald Trump and the Republican Party left many stunned, given their consistent criticism of clean energy and electric vehicles – core products for Tesla.
The Republican Party has consistently undermined renewable energy initiatives for years, with no indication that Elon Musk’s $300 million donation to Trump or his influence on the GOP have altered this stance. The latest budget approved by the GOP-controlled Congress appears to undo progress made by the Biden administration on clean energy and electric vehicle adoption.
The removal of the $7,500 tax credit for electric vehicles, a crucial component of Tesla’s US success, poses a significant threat to the company’s financial outlook. The policy also discourages domestic investment in battery production, a significant advantage that previously accrued to Tesla.
The policy revision further deducts a 30% tax credit for battery storage and solar installations, significantly boosting Tesla’s energy segment.
Tesla urged the Trump administration to gradually phase out the existing incentives rather than abruptly eliminating them in its recent press release.
Without abrupt transition, discontinuing the vitality tax credit poses a significant threat to America’s energy independence and grid reliability; therefore, we strongly recommend that the Senate enacts legislation featuring a gradual phase-down of the 25D and 48e programs. This collaboration will enable a rapid rollout of more than 60 gigawatts of capacity annually, thereby accelerating advancements in artificial intelligence and domestic production capabilities?
After sharing his assertion, Musk noted a stark contrast between the actions of the federal government, which he had previously supported in their efforts to phase out incentives for electric vehicles and renewable energy. While these subsidies were being eliminated, incentives for oil and gas remained intact.
The United States heavily subsidizes its oil and gasoline industries to the tune of billions of dollars annually.
Prior to endorsing Trump and the Republican Party, Musk had stated that he might support eliminating electric vehicle (EV) and clean energy incentives only if incentives for fossil fuels were concurrently abolished.
Elon Musk has officially concluded his tenure in the Trump administration.
Electrek’s Take
For the first time, Elon Musk’s voice is heard criticizing some of Trump’s policies, albeit in a somewhat feeble manner. The official announced that the financial report’s projection of a declining deficit has been revised, citing unforeseen circumstances that have necessitated a reassessment of the budget’s feasibility.
In a recent declaration, Elon Musk expressed concerns about the potential outcome of the 2024 presidential election, stating that Donald Trump might be the only candidate capable of saving the Western world, further emphasizing that if he doesn’t get elected, the United States’ fate will essentially be sealed.
He had specifically targeted President Trump’s initiatives aimed at “eradication of the woke ideology epidemic” and implementing fiscal discipline by reducing the national deficit and debt to sustainable levels.
While divisions in the United States are certainly stark, it is imperative to note that President Trump’s proposed budget could exponentially increase the country’s debt burden, potentially adding around $4 trillion to the national debt within a short span of time. Despite his support for Trump, he has yet to make substantial progress toward these objectives. By tacitly supporting Trump, Musk may have sought to deflect scrutiny from federal regulators and companies that were increasingly scrutinizing his own ventures.
At what cost did he reap those profits?
The electric vehicle (EV) tax credit plays a crucial role in sustaining demand for Tesla’s vehicles in the US, its last significant market where it generates profits from sales.
The elimination of the 30% Investment Tax Credit (ITC) for solar and energy storage would significantly hamper Tesla’s energy storage business, which has been its sole growth driver over the past two years.
In a potentially disastrous turn of events for Tesla, a significant weakening of its financial footing could have a devastating impact on its operations in the United States – hitherto its sole remaining strong market. Canada is gone. As Europe’s electric vehicle market continues to dwindle, Tesla finds itself under intense pressure from Chinese competitors.
