Tesla and Other EV Stocks Drop on Reports Trump Team Plans To Kill Tax Credit

Shares of Tesla (TSLA) and other electric vehicle (EV) makers tumbled Thursday after a report President-Elect Donald Trump and his transition team are planning to end a $7,500 EV tax credit.

Tesla shares dropped nearly 6%, while shares of electric truck maker Rivian (RIVN) plunged over 14%, and Lucid Group (LCID) shares slid 5%. 

President-elect Donald Trump has previously vowed to scale back government support for EVs, though Tesla CEO Elon Musk’s ties with Trump have raised doubts about how thoroughly those promises will be carried out.

Reuters reported Tesla told the Trump team it supports ending the subsidy, which could negatively impact Tesla but harm its rivals more.

That may be because Tesla is less reliant on credits than many of its smaller competitors, according to analysts at Wedbush. Tesla’s “unmatched” scale and longer history of making profitable EVs, could give it “a clear competitive advantage in a non-EV subsidy environment,” the firm said. 

Removing the subsidy could also harm the EV ambitions of the Big Three Detroit automakers, Ford (F), General Motors (GM), and Stellantis (STLA), if they prioritize their more-profitable gas-powered vehicles.