Will Tesla stock go up or down once the EV tax credit expiration ocurrs? This is a question for investors, but it might go in the direction you don’t expect.
Tesla’s stock has been on a wild ride as investors try to figure out what happens when the $7,500 federal EV tax credit disappears. While most people see the credit ending as bad news for electric car sales, some investors think Tesla might actually benefit when cheaper competitors lose their government subsidy. Here’s why the looming tax credit expiration is creating both panic and excitement in EV stock prices, and what it could mean for Tesla’s market dominance.
The rules and loopholes
The signing of the Big Beautiful Bill Act meant the end of the $7,500 federal EV tax credit, which is ending on September 30. This change will impact all automakers and EV customers going forward. The credit had only recently been renewed under the Inflation Reduction Act under President Joe Biden, but now it’s coming to an end. This means EV sales are without subsidies for automakers, especially those that employ unionized workers, which is not the case with most foreign brands or Tesla. The change in these rules could bring a slightly more level playing field for the most dominant EV company on the market.
There’s a loophole
Last month, the IRS created language that allows automakers to take advantage of a small loophole in the rules. As long as customers place a down payment and order a vehicle, they can take delivery of the EV after the September 30 deadline and still enjoy the $7,500 reduction. This only applies to vehicles that are purchased, not leased models. For leased EVs, the deadline firmly remains at the end of the month. This loophole should have dealers and EV customers scrambling to secure a deal before the end of September and the expiration of the tax credit.
Will this benefit Tesla?
Will Tesla’s stock price increase with the EV tax credit expiration, or will it remain the same? The stock price might see a slight bump thanks to a rush for orders, but that will likely be short-lived because once the calendar turns to October 1, the credit is gone. This means an EV market without credits going forward. Will this give Tesla a competitive advantage over other automakers?
The expiration of the tax credit will benefit all automakers, but brands like Tesla and Rivian that only make EVs should benefit the most. The Tesla stock price might rally before the end of 2025, and it could stay at a higher value than its been, but its hard to state that outright without more information. What we know for sure is the electric car tax incentives that drivers and automakers have enjoyed for the past few years will be gone at the end of this month.
Spin it one way or the other
Some think that Tesla should benefit from the expiration of the tax credits because automakers that undercut Tesla in terms of price, due to the incentives, won’t have this benefit any longer. While that is certainly true, Tesla also won’t have the incentives from the tax credits, which means the same pricing change will occur for Tesla as for other automakers. Those EVs that currently undercut Tesla models will continue to do so because the $7,500 change will apply to EVs across the board.
Which EV automakers stand to gain from this change?
Brands that were unable to take advantage of the EV tax credits will actually have a competitive advantage after the end of the month. When the latest round of credits went into effect, EVs from Audi, BMW, Genesis, Nissan, Rivian, Volkswagen, and Volvo did not qualify for the credits. The expiration of these credits will bring a stronger competitive advantage for these brands when customers are searching for EVs and find models from other brands that are similar. Without the $7,500 tax credit incentive, these brands will have more of a fighting chance against other EVs.
Tesla is making a strong push
Tesla has created sales pages and information to specifically promote the tax credit, and customers can take advantage of this incentive by ordering a new model before the end of the month. This promotional advertising could give Tesla stock a bump as the EV tax credit expiration takes place. This strong push is likely going on at all automakers with EV models that will soon lose the credit.
