Tesla Faces Headwinds as EV Tax Credit Expires
Tesla's reliance on government incentives faces a reckoning as the $7,500 federal EV tax credit expires. The subsidy, which once slashed prices on Tesla vehicles by 20% or more, ended September 30—potentially destabilizing the EV market's fragile growth trajectory.
Quarterly EV sales surged 21.1% ahead of the deadline, a temporary boost masking deeper challenges. Tesla's automotive revenue fell 16% to $16.6 billion last quarter, with vehicle unit sales declining consecutively. The expiration hits Tesla hardest among automakers—its stock rally contrasts sharply with deteriorating fundamentals.
While regulatory credits totaling $11 billion and DOE loans previously buoyed Tesla, the company now navigates uncharted territory without price supports. Market observers anticipate demand contraction as consumers face true cost parity between EVs and combustion vehicles.
