The Republicans in Congress have voted for Trump’s ‘Big Beautiful Bill’, which are going to greatly slow down electric vehicles and renewable energy in the US.
Here’s how the new bill is going to affect Tesla.
Solar stocks are all crashing today. Solar Edge is down 20%, and First Solar is down 5%.
EV stocks, like Rivian and Lucid, are also down ~2.5%.
Tesla is operating in both of those markets, and yet, the stock is up 2.5% a the time of the writing.
This could lead people to believe that the new budget bill passed by the US Congress yesterday is actually positive for Tesla, but this is far from the case.
$7,500 EV Tax Credit is going away
As we have extensively reported in the last few weeks, the bill kills the EV tax credit in the US.
By the end of 2025, all automakers who have delivered more than 200,000 electric vehicles in the US will lose access to the tax credit.
Impact on Tesla:
- This should result in a boost in demand for Tesla at the end of 2025 as buyers try to take advantage of the tax credit, but it will result in a serious drop in demand starting in 2026.
- Some competitors will still have access to the tax credit in 2026, while Tesla will not, which could disadvantage it.
$250 annual fee for electric vehicles
On top of removing the tax credit, the bill introduces a $250 annual fee for electric vehicles and a $100 fee for hybrids, which they claim is to fund road repairs traditionally supported by gas taxes.
Impact on Tesla:
- Obviously, this is negatively impacting Tesla by increasing the annual cost of ownership by $250 as it does for every other EV owner.
- The fee is seen as directly targeting EV owners and buyers, who might also turn away from the Tesla brand due to its CEO, Elon Musk, having supported the GOP, which pushed this legislation.
Elimination of Clean Energy Credits
The budget bill terminates credits for most clean energy initiatives. It even tries to eliminate California’s Zero-Emission Vehicle (ZEV) mandate, which might prove difficult.
Impact on Tesla:
- The sale of regulatory credits is a significant part of Tesla’s profits. In fact, Tesla’s sales of regulatory credits were higher than its net income in the first quarter of 2025. It means that Tesla would have lost money without regulatory credit.
- The only positive thing here is that the federal government will likely not be able to eliminate the CARB credits.
Elimination of Solar and Energy Storage Incentives
The bill kills the Investment Tax Credit (ITC) for solar and energy storage systems, effective January 1, 2026. The ITC previously provided a 30% credit for qualifying solar and battery storage installations.
Impact on Tesla
- Tesla deploys both solar and energy storage in the US and therefore it will be negatively affected as demand is expected to drop significantly in 2026 without the tax credit.
- Solar is not a significant business for Tesla anymore, but energy storage deployment is currently Tesla’s only growing business since EV deliveries are down. As a leader in energy storage in the US, Tesla is likely going to feel the impact of the end of ITC more than anyone.
Electrek’s Take
These are all pretty terrible impacts on Tesla’s business mid to long term. The US was Tesla’s safest market, but now it is only for the next 6 months or so.
My theory as to why all other solar and EV stocks are appropriately reacting to the bill passing, but not Tesla’s, is due to the fact that this bill is actually going to help Tesla’s demand in the short term – and Tesla needs it the most in the short term.
Tesla investors are delusional, and they believe that Tesla is going to solve self-driving within the next year and become unstoppable. In the meantime, they can’t (unlike Musk) deny that demand is terrible, but this will help Tesla in 2025.
In 2026, though, good luck. And good luck to the entire EV market in the US, which is already behind the rest of the world. It’s a real bummer, and the fact that Tesla’s CEO is a big part of how this happened is truly mindboggling.
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