Elon Musk is starting to realize, or at least admit, that Trump and the GOP are going to hurt Tesla greatly by removing battery and solar incentives without removing incentives for fossil fuels.
Many people were shocked when Elon Musk decided to back Donald Trump and the Republican Party, considering they have consistently attacked clean energy and electric vehicles, which are Tesla’s main products.
The GOP has been undermining renewable energy for years, and it doesn’t look like Musk’s $300 million donation to Trump and influence on the GOP were able to change that, as the latest budget to pass the GOP controlled-Congress undoes a lot of progress made by the Biden administration on clean energy and electric vehicle adoption.
The budget removes the $7,500 tax credit for electric vehicles, which is a bit part of Tesla’s success in the US. It also kills incentives to build batteries in the US – another incentive that greatly benefited Tesla.
It also removes 30% tax credit on battery storage and solar, which greatly helped Tesla’s energy division.
Yesterday, Tesla issued a statement calling for the Trump government to gradually phase out those incentives rather than removing them altogether:
Abruptly ending the energy tax credits would threaten America’s energy independence and the reliability of our grid – we urge the senate to enact legislation with a sensible wind down of 25D and 48e. This will ensure continued speedy deployment of over 60 GW capacity per year to support AI and domestic manufacturing growth.
Musk shared the statement and then added that while the government that he helped elect is removing incentives for electric vehicles and clean energy, it is not removing those for oil and gas:
The US is incentivizing the oil and gas industry at a rate of hundreds of billions of dollars per year.
Before backing Trump and the Republican Party, Musk had stated that he would be for the removal of EV and clean energy incentives if incentives for fossil fuels were also removed.
Musk has officially exited the Trump administration this week.
Electrek’s Take
It’s interesting to see Musk finally speaking out, albeit weakly, against some of Trump’s policies for the first time. He did note that the budget bill would increase the deficit, and now this.
A quick reminder that Musk said that Trump was the “only one who could save the Western world” and that if he is not elected, the US is basically done.
His stated goals with Trump were to “kill the woke mind virus” and get the deficit and debt under control.
The US has never been more divided, and Trump is pushing a budget that would add about $4 trillion to the US debt over the next few years. His backing of Trump hasn’t achieved anything meaningful toward those goals. Of course, Musk’s real goal in backing Trump was likely to get federal regulators and agencies that were closing in on him and his businesses off his back.
He was successful in doing that, but at what cost?
The EV tax credit is a significant factor in maintaining Tesla’s demand in the US, which is essentially its last primary market where it sells vehicles at a profit.
The removal of the 30% ITC for solar and energy storage would significantly slow down Tesla’s energy storage business, which has been its only growing business for the last two years.
In short, the budget would greatly weaken Tesla’s business in the US, which was its last remaining market that wasn’t doing too badly. Canada is gone. Europe is gone, and Tesla is facing tremendous pressure from competition in China.
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