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EV tax credit rule adjustment provides short-term win, but long-term warning
There are broader implications of the credit’s new rules, which could be viewed as an “extension,” although, fundamentally, the credit could mask the true issue that many EV makers will face: generally speaking, electric cars are still too expensive.
The IRS adjusted the EV tax credit rule last week, which was a big win for consumers. It now allows car buyers to lock up an agreement to buy a vehicle instead of having to take delivery before the deadline of September 30.
This has tremendous advantages for both consumers and companies. For consumers, they are no longer rushed to take delivery of a car that might not be their exact pick just to qualify for the tax credit. Instead, they can build the car they want, make a marginal down payment on it, and still take delivery, even after September 30, and still get the $7,500 off.
For carmakers, they are no longer restricted by production capacity or supply bottlenecks, and can get a vehicle to a buyer after the deadline instead of delivering bad news. The consumer just needs to commit monetarily first.
However, there are broader implications of the credit’s new rules, which could be viewed as an “extension,” although, fundamentally, the credit could mask the true issue that many EV makers will face: generally speaking, electric cars are still too expensive.
Consumer Behavior and Market Dynamics
Everyone is expecting EV makers’ Q3 sales to be slightly higher than normal, as this is the final quarter when the $7,500 EV credit will be available. Buyers are rushing to take advantage of the credit before it expires.
The urgency of car buyers to take advantage of the credit seems to be a positive in the short term. However, there are some indications that this could lead to a “boom-and-bust” cycle, and how EVs sell in subsequent quarters could be a very disappointing reality.
If EVs were at a price point where they were more affordable and people did not need $7,500 off to buy one, we would not be seeing this influx of orders. The fundamental issue with the tax credit is the fact that it is a bit of a crutch for automakers, and that crutch is about to be removed — abruptly.
Sustained incentives for EVs are something that was never going to be available under the Trump Administration. The true demand of EVs will be revealed in Q4, and likely over the first two quarters of 2026.
Policy Instability is a Barrier for Consumers…and Automakers
With the One Big Beautiful Bill that the Trump Administration rolled out, the tax credit’s sunset came abruptly.
Previously, the credit’s termination was set for 2032, but the change, which is absolutely justified in terms of the White House’s powers, sets a tough precedent moving forward: different administrations and different planning for how government funds are spent could dramatically alter plans.
For consumers, their confidence in the stability of these types of programs will be decreased. If a Democrat gets elected in 2028, will the credit return? It’s likely that the credit could become an “On for 4, Off for 4” type of arrangement, depending on the party in the White House, as well as the concentration of that party in the House and Senate.
For automakers, the long-term planning of their supply chains, including whether domestic manufacturing is prioritized and how much capital to allocate toward EVs, becomes a significant question.
If it needs volume to bring down EV prices, the absence of a credit will impact that drastically. Fewer people being able to afford EVs because of their premium prices could put companies in a very strange predicament.
Their roadmaps for their future lineups will be impacted, and they may have to go back to the drawing board for future plans.
Environmental and Economic Stakes
It is important to remember that the EV tax credit was not just a way to make cars more affordable. It was a tool to reduce emissions from passenger transportation. This is the largest source of greenhouse gases in the United States.
Ending the credit risks slowing progress toward climate goals and ceding ground to global competitors, especially China, a global tech hub that has a large population willing to embrace new tech.
Xiaomi CEO congratulates Tesla on first FSD delivery: “We have to continue learning!”
The U.S. needs a stable, long-term strategy to incentivize both consumers and manufacturers to reach climate goals. Short-term band-aids are not going to drive innovation or adoption forward.
Call to Action
To secure a thriving and equitable future for the EV industry, Congress could consider a variety of alternatives that benefit buyers who could use assistance. A tiered incentive program that prioritizes affordability and American innovation would benefit buyers who prefer an EV while making them accessible to lower and middle-income families and buyers.
Higher credits for EVs priced under $40,000 to reach these income levels would be ideal. Additionally, bonuses for vehicles and batteries that are domestically sourced would also encourage car companies to bring manufacturing to the United States, while also helping car buyers lean toward vehicles built here.
The rush to secure credits by consumers proves that incentives work. The United States should be working toward a long-lasting framework that makes EVs accessible to all, while giving the country a competitive edge to compete against powerhouses like China.
A plant manager at a Tesla factory just tipped off the fact that the company will begin production of an affordable model in the coming weeks, all but confirming that a new car will be unveiled tomorrow.
Tesla has been teasing some kind of product unveiling for October 7 on its social media accounts. It has now dropped two separate indications that a new product is coming on its X account.
Fans have been anticipating two things: either the company’s planned affordable model, which has been codenamed “E41,” or the Roadster, a long-awaited vehicle that Tesla has kept under wraps for much longer than it would likely care to admit.
Tesla all but confirms that affordable Model Y is coming Tuesday
André Thierig, Tesla’s plant manager at the German production plant Gigafactory Berlin, tipped off what is likely coming tomorrow at the product unveiling as he revealed during an internal event today that a light version of the Model Y will begin series production and deliveries “in a few weeks.”
Thierig’s revealing of plans was reported by Handelsblatt, a German media outlet.
The description of a “light version of the Model Y” aligns with what CEO Elon Musk said earlier this year, as well as what we have seen on public roads, both covered and uncovered.
Last week, we finally saw an uncovered version of what the affordable model likely is, as it was cruising around near Gigafactory Texas, just outside of Austin.
Tesla coding shows affordable model details, including potential price
Musk said earlier this year, candidly during an Earnings Call, that the affordable model Tesla planned to release was a Model Y.
“It’s just a Model Y. Let the cat out of the bag there,” Musk said.
The images of what we assumed to be the affordable model lined up with Musk’s candid statement:
🚨 It looks like the new affordable Tesla Model Y was spotted near Giga Texas
Model Y body with the Model 3 fascia, no glass roof, and looks as if there is a front bumper camera!
Should be coming soon! https://t.co/UAXQMHjM23 pic.twitter.com/9lC5te9GnW
— TESLARATI (@Teslarati) October 3, 2025
Tesla is expected to unveil its affordable model tomorrow during the planned event, which has been teased twice. Pricing and other details are still pending, but the company is expected to reveal this information tomorrow.
News
Three things Tesla needs to improve with Full Self-Driving v14 release
These are the three things I’d like to see Tesla Full Self-Driving v14 improve.
As Tesla plans to release Full Self-Driving version 14 this week after CEO Elon Musk detailed a short delay in its rollout, there are several things that continue to plague what are extremely well-done drives by the suite.
Tesla Full Self-Driving has truly revolutionized the way I travel, and I use it for the majority of my driving. However, it does a few things really poorly, and these issues are consistent across many drives, not just one.
Tesla Full Self-Driving impressions after three weeks of ownership
Musk has called FSD v14 “sentient” and hinted that it would demonstrate drastic improvements from v13. The current version is very good, and it commonly performs some of the more difficult driving tasks well. I have found that it does simple, yet crucial things, somewhat poorly.
These are the three things I’d like to see Tesla Full Self-Driving v14 improve.
Navigation, Routing, and Logical Departure
My biggest complaint is how poorly the navigation system chooses its route of departure. I’ve noticed this specifically from where I Supercharge. The car routinely takes the most illogical route to leave the Supercharger, a path that would require an illegal U-turn to get on the correct route.
I managed to capture this yesterday when leaving the Supercharger to go on a lengthy ride using Full Self-Driving:
You’ll see I overrode the attempt to turn right out of the lot by pushing the turn signal to turn left instead. If you go right, you’ll go around the entire convenience store and end up approaching a traffic light with a “No U-Turn” sign. The car has tried to initiate a U-turn at this light before.
If you’re attempting to get on the highway, you simply have to leave the convenience store on a different route (the one I made the vehicle go in).
It then attempted to enter the right lane when the car needed to remain in the left lane to turn left and access the highway. I manually took over and then reactivated Full Self-Driving when it was in the correct lane.
To achieve Unsupervised Full Self-Driving, such as navigating out of a parking lot and taking the logical route, while also avoiding illegal maneuvers, is incredibly crucial.
Too Much Time in the Left Lane on the Highway
It is illegal to cruise in the left lane on highways in all 50 U.S. states, although certain states enforce it more than others. Colorado, for example, has a law that makes it illegal to drive in the left lane on highways with a speed limit of 65 MPH or greater unless you are passing.
In Florida, it is generally prohibited to use the left lane unless you are passing a slower vehicle.
In Pennsylvania, where I live, cruising in the left lane is illegal on limited-access highways with two or more lanes. Left lanes are designed for passing, while right lanes are intended for cruising.
Full Self-Driving, especially on the “Hurry” drive mode, which drives most realistically, cruises in the left lane, making it in violation of these cruising laws. There are many instances when it has a drastic amount of space between cars in the right lane, and it simply chooses to stay in the left lane:
The clip above is nearly 12 minutes in length without being sped up. In real-time, it had plenty of opportunities to get over and cruise in the left lane. It did not do this until the end of the video.
Tesla should implement a “Preferred Highway Cruising Lane” option for two and three-lane highways, allowing drivers to choose the lane that FSD cruises in.
It also tends to pass vehicles in the slow lane at a speed that is only a mile an hour or two higher than that other car.
This holds up traffic in the left lane; if it is going to overtake a vehicle in the right lane, it needs to do it faster and with more assertiveness. It should not take more than 5-10 seconds to pass a car. Anything longer is disrupting the flow of highway traffic.
Parking
Full Self-Driving does a great job of getting you to your destination, but parking automatically once you’re there has been a pain point.
As I was arriving at my destination, it pulled in directly on top of the line separating two parking spots. It does this frequently when I arrive at my house as well.
Here’s what it looked like yesterday:
Parking is one of the easier tasks Full Self-Driving performs, and Autopark does extremely well when the driver manually chooses the spot. I use Autopark on an almost daily basis.
However, if I do not assist the vehicle in choosing a spot, its performance pulling into spaces is pretty lackluster.
With a lot of hype surrounding v14, Tesla has built up considerable anticipation among owners who want to see FSD perform the easy tasks well. As of now, I believe it does the harder things better than the easy things.
Elon Musk
Elon Musk teases previously unknown Tesla Optimus capability
Elon Musk revealed over the weekend that the humanoid robot should be able to utilize Tesla’s dataset for Full Self-Driving (FSD) to operate cars not manufactured by Tesla.
Elon Musk revealed a new capability that Tesla Optimus should have, and it is one that will surely surprise many people, as it falls outside the CEO’s scope of his several companies.
Tesla Optimus is likely going to be the biggest product the company ever develops, and Musk has even predicted that it could make up about 80 percent of the company’s value in the coming years.
Teasing the potential to eliminate any trivial and monotonous tasks from human life, Optimus surely has its appeal.
However, Musk revealed over the weekend that the humanoid robot should be able to utilize Tesla’s dataset for Full Self-Driving (FSD) to operate cars not manufactured by Tesla:
Probably
— Elon Musk (@elonmusk) October 5, 2025
FSD would essentially translate from operation in Tesla vehicles from a driverless perspective to Optimus, allowing FSD to basically be present in any vehicle ever made. Optimus could be similar to a personal chauffeur, as well as an assistant.
Optimus has significant hype behind it, as Tesla has been meticulously refining its capabilities. Along with Musk’s and other executives’ comments about its potential, it’s clear that there is genuine excitement internally.
This past weekend, the company continued to stoke hype behind Optimus by showing a new video of the humanoid robot learning Kung Fu and training with a teacher:
🚨 Some have wondered if this is ‘staged’ or if Optimus is teleoperated here
Elon Musk said this is completely AI https://t.co/N69uDD6OVM
— TESLARATI (@Teslarati) October 4, 2025
Tesla plans to launch its Gen 3 version of Optimus in the coming months, and although we saw a new-look robot just last month, thanks to a video from Salesforce CEO and Musk’s friend Marc Benioff, we have been told that this was not a look at the company’s new iteration.
Instead, Gen 3’s true design remains a mystery for the general public, but with the improvements between the first two iterations already displayed, we are sure the newest version will be something special.
Tesla plant manager tips off affordable model production
Three things Tesla needs to improve with Full Self-Driving v14 release
Elon Musk teases previously unknown Tesla Optimus capability
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