Tesla CEO Elon Musk has reversed his stance on ending the $7,500 tax credit for electric vehicles just weeks after advocating for its removal. The shift in opinion comes as the company faces financial struggles and a decline in sales.
The tax credit, which aims to spur demand for EVs, is set to be phased out under the “big, beautiful bill” proposed by the House of Representatives. Musk had argued that removing the credit would hurt legacy automakers more than it would Tesla, but now claims that ending the incentive would harm American energy independence and grid reliability.
The change in stance has caused a rift between Musk and President Donald Trump, who accused him of having “a problem” with the bill after he found out about the potential loss of federal support for EVs.
Analysts have expressed concerns over Tesla’s financial situation, which includes a 71% decline in net income in the first quarter of this year. The company has been struggling to maintain buyer demand, and ending the tax credit could further exacerbate the issue.
Despite cutting his price target for Tesla, many analysts still have a buy recommendation on the stock, citing its competitive advantage and demand for EVs. However, others warn that the loss of the tax credit would be a significant blow to the company’s finances.
Source: https://edition.cnn.com/2025/06/05/business/musk-trump-tesla-ev-tax-credit