The Impact of EV Tax Credit Changes on Tesla and the Broader Market

The electric vehicle (EV) industry is bracing for significant changes as the U.S. government moves to end the $7,500 federal tax credit for EV purchases. This policy shift, embedded within President Donald Trump’s recently passed “Big, Beautiful Bill,” is expected to have far-reaching consequences for automakers, consumers, and the global EV market.

Implications for Tesla

Tesla, the largest EV manufacturer in the United States, is expected to see a short-term surge in deliveries as consumers rush to take advantage of the tax credit before it expires. This could make the third quarter of 2025 one of Tesla’s strongest in an otherwise challenging year. During the first half of 2025, Tesla’s deliveries dropped by 13% in Q1 and 14% in Q2 compared to the same periods in 2024, totaling 720,803 vehicles. Analysts estimate that Tesla might deliver around 1.4 million vehicles in 2025, a significant decline from the 1.8 million delivered in both 2024 and 2023.

To boost sales, Tesla is offering incentives such as free paint upgrades in patriotic colors—Ultra Red, Pearl White, and Deep Blue Metallic—on select models until mid-July. Additional promotions, including interest-free loans and special leasing offers, are also being rolled out. While these strategies could bolster sales in the short term, the long-term impact of losing the tax credit remains uncertain.

Challenges for Emerging Startups

While Tesla adapts to the new landscape, smaller startups like Slate are already feeling the heat. Known for its ambitious plans to produce an affordable electric truck priced under $20,000, Slate recently revised its pricing to the “mid-twenties” due to the elimination of the federal tax credit. This move has raised questions about whether the company can sustain the consumer interest it initially garnered, with over 100,000 reservations for its Blank Slate truck earlier this year.

For startups like Slate, the removal of the tax credit could hinder their ability to compete with established players like Tesla and foreign automakers. The increased cost of EVs might deter price-sensitive consumers, potentially slowing down the adoption of electric vehicles in the U.S. market.

Global Impacts: The Case of Thailand

The ripple effects of policy changes in the U.S. are also being felt globally. In Thailand, the hyper-competitive EV market, driven by Chinese automakers like BYD, is testing the country’s ambitious local production goals. Smaller Chinese brands such as Neta, which entered the Thai market in 2022, are struggling to meet government incentive requirements, including matching import volumes with domestic production. With sales slowing and competition intensifying, Thailand’s efforts to become a regional EV hub face significant challenges.

China’s dominance in the EV sector, coupled with U.S. policy shifts, underscores the interconnected nature of the global auto industry. As governments and companies navigate these changes, the balance of power in the EV market may continue to shift.

What Lies Ahead?

As the September 30 deadline for the tax credit approaches, automakers are racing against the clock to capitalize on the remaining incentives. For Tesla, this means leveraging its market leadership and promotional strategies to drive sales. For startups like Slate, it means navigating a more challenging financial landscape. On a global scale, countries like Thailand must adapt to the competitive pressures emanating from China while pursuing their EV ambitions.

*The elimination of the $7,500 EV tax credit marks a pivotal moment for the electric vehicle industry. As stakeholders adapt to this new reality, the long-term implications for consumer adoption, market competition, and global production strategies remain to be seen.*