Tesla Hit By Major Changes Today as Tax Breaks End
Tesla could lose some sales in the coming months as the U.S. government tax credits end for EV cars.
Quick overview
- September 30th marks the end of electric vehicle tax breaks in the U.S., significantly impacting Tesla's sales.
- The Clean Vehicle Credit, which provided a $7,500 incentive for new EV purchases, has been terminated by recent legislation.
- Tesla, along with Rivian and Lucid, is expected to see a decline in sales due to the loss of this tax credit.
- Despite a current rise in stock value, Tesla may face challenges in attracting buyers without the tax incentive.
September 30th marks the last day that electric vehicles will enjoy tax breaks from the United States government, and Tesla is likely to take the biggest bottom line hit.
Previously, the Clean Vehicle Credit would have provided new vehicle owners with a $7,500 credit that highly incentivized purchases of electric vehicles. This credit was supposed to extend through 2032 due to the Inflation Reduction Act, but President Donald Trump’s sweeping budget act, known colloquially as the Big, Beautiful Bill, has brought the tax credit scheme to an end today.
While the tax credit was not applied to every Tesla vehicle sold, it did apply to a large percentage of them. The credit was valid for Cybertrucks, some Model Y SUVs and the Model 3 Sedan, among others. From this point, no new qualifying vehicle sales will benefit from the $7,500 tax credit.
What Does This Mean for Tesla?
The end of the EV tax credit will affect more than just Tesla (TSLA). It is also expected to seriously hurt sales for Rivian (RIVN) and Lucid (LCID). These are three of the leading electric car manufacturers in the United States, and they will all expect their sales to dip from here as a result of the tax credit ending.
For now, Tesla stock is up by 0.21% for the day, now at $443 per share. The company’s stock value is up substantially for the month, looking to end September on a remarkable high. The company will be reporting its third quarter sales later this week, and analysts are very optimistic about what those numbers will look like.
However, the company is expected to take a hit in sales after the tax credits come to an end. Without that massive incentive, there will likely be fewer buyers, but Tesla may find a way to pivot and draw in more new Tesla owners. It is possible that the next quarter will be much worse for the company, though, until they can figure out how to absorb the loss of the tax credit.
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