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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.
Elon Musk
Tesla CEO Elon Musk sends final warning to Bill Gates over short position
“If Gates hasn’t fully closed out the crazy short position he has held against Tesla for ~8 years, he had better do so soon,” Musk said.
Tesla CEO Elon Musk sent a final warning to former Microsoft CEO Bill Gates over his short position, which he confirmed he held to Musk directly several years ago.
Gates has been a skeptic of Tesla for some time, but he has also tried to work with Musk on philanthropic opportunities several years ago, which was coincidentally when he admitted to the company’s frontman that he held a short position.
Musk was, in turn, “super mean” to Gates, according to Walter Isaacson’s biography about the Tesla CEO. Gates had put $500 million against Tesla, shorting the stock and hoping to profit from its failure.
Elon Musk explains Bill Gates beef: He ‘placed a massive bet on Tesla dying’
A short position essentially means Gates is betting Tesla shares will go down, which would make him money. However, shares have gone up over six percent this year and increased nearly 150 percent over the past five years.
At the recent Annual Shareholder Meeting, Musk made many claims about Tesla’s future projects and how they could manage to disrupt various industries. He also recently had a massive $1 trillion compensation package approved, which will be awarded in twelve tranches, all of which combine a company valuation goal and an individual goal related to a product.
Musk was able to complete his last approved pay package, but it was not awarded due to a ruling by a Delaware Chancery Court. Nevertheless, his track record of proving growth for Tesla shareholders is excellent, and investors are obviously very encouraged by his capabilities as a CEO, considering 76.6 percent of shareholders voted to approve his new compensation.
After it was revealed that the Gates Foundation dumped 65 percent of its Microsoft position for nearly $9 billion, Musk had one final message for him: drop your Tesla short position soon, or else.
If Gates hasn’t fully closed out the crazy short position he has held against Tesla for ~8 years, he had better do so soon
— Elon Musk (@elonmusk) November 16, 2025
Musk’s rivalry with Gates is mostly founded on the Tesla CEO’s discontent with the former Microsoft frontman’s short position. However, Musk might have a bit of a soft spot for Gates, considering he is giving him a warning of what is potentially to come. If he really wanted to do some damage to Gates, he would not give him any heads-up at all.
News
Tesla rolls out most aggressive Model Y lease deal in the US yet
With the promotion in place, customers would be able to take home a Model Y at a very low cost.
Tesla has rolled out what could very well be its most aggressive promotion for Model Y leases in the United States yet. With the promotion in place, customers would be able to take home a Model Y at a very low cost.
Zero downpayment leases
The new Model Y lease promotion was initially reported on X, with industry watcher Sawyer Merritt stating that while the vehicles’ monthly payments are still similar to before, the cars can now be ordered with a $0 downpayment.
Tesla community members noted that this promotion would cut the full payment cost of Model Y leases by several thousand dollars, though prices were still a bit better when the $7,500 federal tax credit was still in effect. Despite this, a $0 downpayment would likely be appreciated by customers, as it lowers the entry point to the Tesla ecosystem by a notable margin.
Premium freebies included
Apart from a $0 downpayment, customers of Model Y leases are also provided one free upgrade for their vehicles. These upgrades could be premium paint, such as Pearl White Multi-Coat, Deep Blue Metallic, Diamond Black, Quicksilver or Ultra Red, or 20″ Helix 2.0 Wheels. Customers could also opt for a White Interior or a Tow Hitch free of charge.
A look at Tesla’s Model Y order page shows that the promotion is available for all the Model Y Premium Rear-Wheel Drive and the Model Y Premium All-Wheel Drive. The Model Y Standard and the Model Y Performance are not eligible for the $0 downpayment or free premium upgrade promotion as of writing.
News
Tesla is looking to phase out China-made parts at US factories: report
Tesla has reportedly swapped out several China-made components already, aiming to complete the transition within the next two years.
Tesla has reportedly started directing its suppliers to eliminate China-made components from vehicles built in the United States. This would make Tesla’s US-produced vehicles even more American-made.
The update was initially reported by The Wall Street Journal.
Accelerating North American sourcing
As per the WSJ report, the shift reportedly came amidst escalating tariff uncertainties between Washington and Beijing. Citing people reportedly familiar with the matter, the publication claimed that Tesla has already swapped out several China-made components, aiming to complete the transition within the next two years. The publication also claimed that Tesla has been reducing its reliance on China-based suppliers since the pandemic disrupted supply chains.
The company has quietly increased North American sourcing over the past two years as tariff concerns have intensified. If accurate, Tesla would likely end up with vehicles that are even more locally sourced than they are today. It would remain to be seen, however, if a change in suppliers for its US-made vehicles would result in price adjustments for cars like the Model 3 and Model Y.
Industry-wide reassessments
Tesla is not alone in reevaluating its dependence on China. Auto executives across the automotive industry have been in rapid-response mode amid shifting trade policies, chip supply anxiety, and concerns over rare-earth materials. Fluctuating tariffs between the United States and China during President Donald Trump’s current term have made pricing strategies quite unpredictable as well, as noted in a Reuters report.
General Motors this week issued a similar directive to thousands of suppliers, instructing them to remove China-origin components from their supply chains. The same is true for Stellantis, which also announced earlier this year that it was implementing several strategies to avoid tariffs that were placed by the Trump administration.
@teslarati 🚨 Tesla Full Self-Driving v14.1.7 is here and here’s some things it did extremely well! #tesla #teslafsd #fullselfdriving ♬ You Have It – Marscott
Tesla CEO Elon Musk sends final warning to Bill Gates over short position
Tesla rolls out most aggressive Model Y lease deal in the US yet
Tesla is looking to phase out China-made parts at US factories: report
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