From Bearded Tesla Guy.
Tesla is about to face a new headwind, and it’s going to be at the expense of customers. Some big shifts are about to take shape after the House of Representatives officially pass Donald Trump’s Big Beautiful Bill, despite criticism from Elon Musk.
In 2023, Tesla started benefiting from the newly passed EV Tax credit reform included in the Inflation Reduction Act of 2022. This update to the 30D Clean Vehicle Credit included many changes that overnight qualified many new customers to claim up to $7,500 in tax credits for qualified new EV’s. Over the course of the next 2 years, Tesla has qualified every vehicle except for the Model S, and the Model X just recently had a price increase that removed it form tax credits eligibility. As it sits right now, the best selling car in the world, the Tesla Model Y, is qualified for the EV tax credit, buyers can transfer this $7,500 to Tesla and receive this at time of purchase.
These new rules ignighted progress in electrification that we have not seen in the U.S. before. Those efforts have grown market share for EV’s and helped many manufacturers allocate resources to EV tech.
Despite significant opposition both publicly and politically, the Big Beautiful Bill was able to pass in the House of Representatives by 1 vote. This means that the tax bill will head to Donald Trump for signature on July 4th in a symbolic ceremony becoming law.
The tax bill stipulates new rules on EV tax credits, including new clean vehicles, used clean vehicles and even commercial clean vehicles. The $7,500, $4,000, and $7,500 Respectively will be eliminated after September 30th, 2025. Surprisingly, this could have actually been worse as the original bill language included annual fees in excess of 2x the average cost annually in gas tax of the average gas car on the road.
For the next 3 months, nothing has changed. In fact, you can buy a brand new qualified EV, and assuming your income is qualified, you can get the full tax credit available. This will continue to be the case for the remainder of this quarter, but starting in October, there will no longer be any tax credits for EV’s.
There are other tax credits going away for solar and alternative energy, but those have a phase out period unlike the Clean Vehicles tax credits. What Tesla does with this is anyone’s guess, and historically we have seen Tesla adjust pricing, but can they make the same aggressive price reduction again?
For the remainder of this quarter, expect to see full pricing, without discounts on all qualified vehicles. It is unlikely we will see much for incentives on these cars also, and after September, expect to see incentives target at monthly payment.
Links:
Qualified Vehicles: https://fueleconomy.gov/feg/tax2023.shtml
IRS Guidance 12.29.23: https://www.irs.gov/pub/taxpros/fs-2023-29.pdf
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