Elon Musk Now Wants EV Tax Credit He Once Opposed as Tesla Faces Financial Struggles

Credit: CNN Newsource

Not long ago, Tesla CEO Elon Musk was publicly calling for the end of the $7,500 tax credit for electric vehicle (EV) buyers. But now, with Republican lawmakers proposing to eliminate those very incentives, Musk and Tesla are fighting to keep them.

“Abruptly ending the energy tax credits would threaten America’s energy independence and the reliability of our grid,” Tesla’s solar division posted last month. Musk added on his platform X, “There is no change to tax incentives for oil & gas, just EV/solar.”

The shift in stance comes amid mounting financial pressure for Tesla. Once thought to be resilient in a market without subsidies, Tesla’s sales have plummeted in 2024—posting its largest-ever quarterly drop and a 71% decline in net income during the first quarter.

JPMorgan estimates that the loss of the EV tax credit could cost Tesla roughly $1.2 billion annually.

Musk’s reversal has fueled a political split between him and President Donald Trump, who accused the Tesla CEO of suddenly opposing the Republican-backed “Big Beautiful Bill” after realizing the EV credit was being cut. “Elon and I had a great relationship,” Trump told reporters. “I don’t know if we will anymore.”

Musk has denied that the tax credit is his primary concern, saying instead that the bill contains excessive spending. “Keep the EV/solar incentive cuts in the bill… but ditch the MOUNTAIN of DISGUSTING PORK,” he posted on X.

Still, analysts say Tesla's weakened financial position makes these credits more crucial than ever. Dan Ives of Wedbush Securities noted that while Tesla may weather the cuts better than rivals, “it will still hurt. And Tesla needs all of the demand help it can get.”

The bill, as written, would maintain tax credits for newer EV makers like Rivian and Lucid, while ending them for Tesla and most legacy automakers. Analysts also point to sluggish EV demand across the U.S. and a lack of new Tesla models—especially in the low-cost market—as further signs of strain.

John Murphy of Bank of America put it bluntly: “I think 8% market share might be the high-water mark for EV,” he said.

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