Elon Musk May Need to Recalculate His Opinion on EV Tax Credit Repeal

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On the campaign trail last year, asked about US EV subsidies, Elon Musk said that he was opposed to all subsidies and would be happy with both EV and fossil fuel subsidies being removed. Of course, Republicans in control of everything are not going to remove fossil fuel subsidies — not even a tiny iota of a chance. Musk squirmed at some point into saying that it may hurt Tesla a little in the short term to lose the US EV tax credit, but could possibly help in the long term by eliminating less competitive opponents.

Let’s perhaps skip over the fact that fossil fuel vehicles are the opponents, and Tesla’s whole mission was initially to push other automakers to electrify faster. (Making the argument that other automakers will have an even harder time selling EVs and thus fail doesn’t jibe with Tesla’s mission at all.) Other Tesla execs and former execs have been clear that removing the US EV tax credits will definitely hurt Tesla. But let’s get into Musk’s argument a little bit.

For Musk’s argument to work, Tesla would need to have strong consumer demand and strong gross margins. However, Tesla sales have declined while the overall EV market has grown. As just reported, in California, where Tesla accounts for the majority of EV sales, Tesla’s sales dropped almost 12% in 2024 while overall EV sales rose. At least 18 auto brands had their EV sales increase. Tesla is struggling to stabilize its sales, not to mention grow again, while other automakers are growing smoothly.

Yesterday, we published an analysis on how much lower US EV sales may sales may be in the coming years if the US EV tax credit is removed. The project puts a nearly 3 million vehicle gap between an expected ~4.2 million EV sales in 2030 without the tax credit to an expected ~7 million EV sales in 2030 with it. If that projection is anywhere close to accurate, how would that not massively hurt Tesla?

Perhaps Elon Musk never ran any numbers, never did any real analysis, and just said what he thought he should say to help Donald Trump’s campaign for the White House. It wouldn’t be the first time Trump or his associates deceived people while campaigning. But if Musk did make any kind of analysis or calculations on this matter, perhaps after seeing sales drop, drop, drop, he should reconsider the impact to Tesla if the EV tax credit is repealed.