The Threat to End EV Tax Credits Causes Tesla Stock to Drop

Written by: Timothy St. John • Wednesday, July 2, 2025 • 2 min read

• Last updated: Wednesday, July 2, 2025

Tesla sales are up recently, helping bring the stock price out of its dip.

Quick overview

Elon Musk and Donald Trump are in a feud over potential tax credits for electric vehicles, causing Tesla stock to drop over 5%.
Despite the initial decline, Tesla stock rebounded by 4.73% after positive EV sales reports from China and Europe exceeded expectations.
In the second quarter, Tesla delivered over 384,000 vehicles, surpassing sales expectations and improving its outlook for the future.
Tesla is working on a new vehicle platform, which has contributed to lower sales compared to previous years, but recent figures suggest potential for growth.

Elon Musk and President Donald Trump continued their feud as Trump threatened to take away tax credits on electric vehicles (EVs), and Tesla (TSLA) stock fell more than 5% Tuesday as a result.

No tax breaks for electric vehicles could eb Tesla's future. — No tax breaks for electric vehicles could eb Tesla’s future.

Tesla may have lost plenty of stock value on Tuesday as its CEO Musk battled in a war of words with Trump, but the company made a comeback as trading opened on Wednesday. At the time of writing, Tesla stock had jumped 4.73% and had regained most of its recently lost value.

What helped Tesla stock recover so quickly? It looks like this week’s reports of EV sales shifted the investor sentiment. As sales numbers came in for China and Europe, they showed that EV sales were better than anticipated. In some markets, Tesla sales are still dropping compared to earlier in the year, but there are a number of areas where Tesla sales are up significantly.

Tesla Sales Reports Promises Rosy Future

The figures are in for Tesla’s second quarter, and it appears that the company has beaten the naysayers who doubted that Tesla could overcome shifting public opinion. Sales are still down compared to last year and the year before, but they are higher than anticipated.

In the second quarter of the year, Tesla managed to deliver just over 384,000 vehicles. The expectation for sales numbers was closer to 340,000 or 360,000 on the optimistic end. Since Tesla has dashed sales expectations in a good way, their stock has shot up and their outlook for the future is much better than it was last month.

Tesla is developing a new vehicle platform, and it is for that reason ah the company says its sales are lower than they were in previous years. But thanks to these recent figures, Tesla might actually be able to match its total sales for 2025 to those of the last two years. That would be around 1.8 million, where the company has stayed for several years now.

If Tesla can pull a similar number off this year and still make progress on its new vehicle platform, they should be well positioned to grow their stock. Even though Musk and Trump are still fighting and EV tax breaks might disappear, the company could still continue to please its stockholders.

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ABOUT THE AUTHOR See More

Timothy St. John

Financial Writer - European & US Desks

Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.