With the loss of the $7,500 electric vehicle tax credit, it appears Tesla CEO Elon Musk was right all along.
As the loss of the tax credit begins to take effect, automakers that have long relied on the $7,500 credit to generate sales for themselves are beginning to adjust their sales strategies and their overall transition to electrification.
On Tuesday, General Motors announced it would include a $1.6 billion charge in its upcoming quarterly results from its investments in electric vehicles.
Ford said in late September that it expected demand for its electric vehicles to be cut in half. Stellantis is abandoning plans to produce only electric vehicles in Europe by 2030, and Chrysler, a brand under the Stellantis umbrella, is abandoning lofty electric vehicle sales goals here in the United States.
How Tesla could benefit from the “Big Beautiful Bill” which focuses on subsidies for electric vehicles
The electric vehicle tax credit and subsidies have achieved what many of us believed they would do: hide automakers from the truth about their demand for electric vehicles. Simply put, their products are not priced attractively enough for what they offer, and there is no real benefit to buying electric vehicles developed by legacy companies.
These tax credits helped companies simply compete with Tesla, nothing more, nothing less. Without them, their products probably wouldn’t have worked as well. This is why these companies are suddenly reversing course.
This is something Elon Musk has always said.
Last January, during the fourth quarter and full year 2024 earnings call, Musk said:
“I think it would be devastating to our competitors and slightly to Tesla. But, in the long run, it probably helps Tesla, that would be my guess.”
In July last year, Musk said on X:
“Remove all subsidies. It will only help Tesla.”
Remove subsidies. This will only help Tesla.
Also remove subsidies from all industries!
– Elon Musk (@elonmusk) July 16, 2024
Over the past few years, Tesla has started to lose market share in the United States, mainly because more companies have entered the electric vehicle manufacturing market and more models are offered.
No one has been able to make a significant dent in what Tesla has done, and although its market share has declined, it still has nearly half of all electric vehicle sales in the United States.
Tesla’s U.S. electric vehicle market share by year
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- 2020 – 79%
- 2021 – 72%
- 2022 – 62%
- 2023 – 55%
- 2024 – 49%
While others are adjusting to what they believe is subdued demand for their electric vehicles, Tesla just reported its strongest quarter in company history, with just under half a million deliveries.
Will Tesla Thrive Without the Electric Vehicle Tax Credit? Five reasons why they might
Although Tesla benefited from the electric vehicle tax credit, particularly in the last quarter, some believe that this will have little impact since it was lost. The company has many other focuses, the main priority of which seems to be autonomy and AI.
One thing is certain: Musk was right.
