Has Elon Musk Made A U-Turn On The US EV Tax Credit? Is The US Keeping It?

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During the 2024 US  presidential campaign, Donald Trump repeatedly attacked electric vehicles and Joe Biden’s EV policies, including the US EV tax credit (which was first passed under George W. Bush, but which was updated and strengthened under Joe Biden — and which revived tax credits for Tesla under Biden).

As part of Donald Trump’s executive actions on Day 1 in office, we got: “[…] by considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies and effectively mandate their purchase by individuals, private businesses, and government entities alike by rendering other types of vehicles unaffordable.” That was amidst several other statements against any EV-supportive policies.

Notably, during the campaign seasons, Elon Musk also said he was against ending all subsidies, and he said that while losing the EV tax credit would effectively make Tesla vehicles more expensive for consumers, it would hurt Tesla’s competitors more, which would probably help Tesla in the long term. It’s never been a compelling argument, especially since the cars the subsidies are helping to compete with are mostly fossil fueled cars, and those cars get more help if the subsidy is removed. Also, the idea that fossil fuel subsidies would be removed and it would be an even playing field was always absurd and unrealistic.

There was never any discussion or comment indicating that Musk would try to get Trump to retain the consumer EV tax credit. Also, let’s clarify that this would need to be done by Congress as a whole, not just an executive order from Donald Trump. It was enacted by Congress and would have to be repealed by Congress.

Well, in Tesla’s shareholder letter yesterday, we seem to get indication the EV tax credit is here to stay — or, at least, Tesla hopes it is.

For one, Tesla specifically wrote this in an important section of the shareholder letter: “We expect Cybertruck to be eligible for the IRA consumer tax credit, helping to improve affordability and access for even more customers.” Why would the company write that if the tax credit was about to be axed? Also, let’s just be clear — “IRA” there refers to the Inflation Reduction Act signed into law by Joe Biden. The indicates they are referring to current law, but maybe it also means Tesla is covering its bases if the IRA is repealed?

Also, down in a section highlighting the new Tesla Model Y (page 18), Tesla shows pricing minus incentives and expected gas savings. In the fine print, Tesla writes, “Estimated savings includes $6,000 in gas savings estimated over five years and the $7,500 Federal Tax Credit, available to eligible buyers and subject to MSRP caps.” Again, that assumes (quite prominently) that the EV tax credit remains.

These are good signs for the EV tax credit, I presume. Unless it’s just Tesla trying to make pricing look better in the moment, even if Musk knows the tax credit is on the chopping block. But, then, one would presume that this would not be put in the main body of the letter “We expect Cybertruck to be eligible for the IRA consumer tax credit, helping to improve affordability and access for even more customers.” Right?

As I’ve said for months, repealing the EV tax credit would hurt Tesla — badly. Former Tesla execs and staff have said the same. Current Tesla sales staff would tell you the same. Elon Musk claimed otherwise on the campaign trail, inviting repeal of the tex credit, and Trump has had a clear vendetta against electric vehicles (which I’m sure his oil buddies are also not a fan of). What can we expect now on this front?