The electric vehicle (EV) market is facing a potential threat as the US considers ending the $7,500 tax credit for EV purchases. According to researcher Troy Teslike, this move could significantly impact Tesla’s deliveries in the country.
Impact of Tax Credit Cancellation
Teslike notes that the cancellation of similar incentives in France and Germany led to a decline in Tesla’s sales in those regions. The cancellation of the $7,500 tax credit in the US could have a similar effect, causing a fall in sales for the company.
Historical Precedent
In France, the cancellation of a €5,000 ecological bonus for electric vehicles resulted in a significant decline in Tesla’s sales. Similarly, in Germany, the cancellation of a €4,500 environmental bonus had a negative impact on EV sales. These examples suggest that the cancellation of the US tax credit could have a similar effect.
Twitter Post from Troy Teslike
Here are two data points on what could happen when the $7,500 Federal Tax Credit in the US is canceled:
- In France, the €5,000 Ecological Bonus for electric vehicles was canceled a year ago on December 14, 2023. Tesla’s year-to-date sales from January to November are down by…
Plans to End the Tax Credit
In November, it was reported that President-elect Donald Trump’s transition team is planning to kill the $7,500 tax credit available on EV purchases. Tesla representatives have expressed support for ending the subsidy, with CEO Elon Musk stating, “In my view, we should end all government subsidies, including those for EVs, oil and gas.”
Potential Consequences
While Musk believes that the impact of the elimination of subsidies would be slight for Tesla, others are not as hopeful. The Future Fund Managing Partner Gary Black warns that the killing of the consumer tax credit will have a negative impact on Tesla’s EPS, similar to the one experienced by the company when it resorted to price cuts to increase delivery volume in 2023.
Loss of Market Share
Without the tax credit, Teslas will effectively be $7,500 more expensive compared to gas cars from luxury brands like BMW, Mercedes, Porsche, and Audi. This could lead to a loss of market share for Tesla, as consumers may opt for cheaper alternatives.
Conclusion
The potential end of the $7,500 electric vehicle tax incentive poses a significant threat to Tesla’s deliveries in the US. While the company’s CEO believes that the impact will be slight, others warn of a more significant consequence. As the US considers ending the tax credit, the EV market is left wondering what the future holds.