EV tax credits will no longer be available. Are you still buying Tesla?
Tesla offers Musk a $1 trillion stock-based compensation plan
Tesla’s board proposed a $1 trillion equity-based pay plan for Elon Musk, the biggest CEO in history, in the ongoing legal battle over past pay.
The looming expiration date for federal electric vehicles (EVs) tax deductions is shaking the EV market and Tesla (NASDAQ: TSLA)major American EV manufacturers may be the most affected. The stock fell 45% in 2025, reaching $214 in April.
And despite the stock’s recent bounces back in weeks/months, Tesla CEO Elon Musk is not too optimistic about the short-term outlook.
Tesla has another rough revenue report
In its second quarter revenue report on July 23, Tesla saw a 16% drop in second quarter sales. Automakers also saw a year-over-year decline in both revenue and vehicle delivery.
Musk said in July that the company had several “bad quarters” and highlighted increased tariff-related costs and expiration dates for tax credits as contribution factors. The company plans to limit vehicle inventory for the third quarter, and it is unclear whether it will be able to guarantee delivery of orders placed after August.
Musk, who was an adviser to President Donald Trump until May, said in April that he believed he would benefit “prosperity.” Tesla is a US manufacturer, but imports a variety of auto parts from multiple foreign countries affected by tariffs, including battery cells from China.
End of EV Tax Credit
The federal government EV tax credit, first introduced in 2009, was implemented as an incentive for U.S. consumers to buy electric vehicles. The current credit for a new EV purchase is $7,500, while a second-hand car purchase can receive $4,000.
But now that Congress has passed President Trump’s big and beautiful bill, these credit incentives will expire on September 30th. Consumers who deliver cars after September 30th will still receive credit if their purchase is made before the deadline.
In 2024, the US Treasury Department and the IRS Office reported that the government spent more than $2 billion in federal tax credits on purchases of more than 300,000 electric vehicles. It is likely that consumers will take advantage of expired credits and will see a temporary surge in EV sales in September, then falling afterwards.
A survey published in the National Economic Research Bureau in October 2024 predicts that if credit is eliminated, U.S. EV sales will fall by nearly 30%.
Tesla stock price rose in August
EV’s stock price rose 9% in August, marking its second consecutive month of price rise. However, as stock prices are currently down 16% in the first week of September in 2025, there is much work to do. It has been more than eight months since Tesla stock reached its all-time high, peaking at $488 on December 2, 2024.
Competitors such as Ford Motor Company and General Motors will also be affected by the tax credit exclusion, but gas vehicle production will be receding. Ford’s stock price rose 18% in 2025 as of early September, but GM’s 17% increased.
Are you buying Tesla stock now?
Tesla stocks have been rising in recent months, but macroeconomic factors such as the ongoing tariff disputes and the presidential administration, which has actively rolled back EV initiatives, have made stocks a potentially volatile investment.
Investors can make more informed decisions about the long-term value of stocks within their portfolio once the tax credit expires. And there’s a high chance that stocks will bounce back when President Trump leaves office. But for now, investors need to wait for their next earnings report before purchasing the stock.
Motley Fools have a job at Tesla and recommend it. Motley Fool recommends General Motors. Motley Fools have a disclosure policy.
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