Repealing the EV tax credit would hurt Tesla’s competitors more than it would Tesla, CEO Elon Musk said during an earnings call this week.Axing the $7,500 incentive would have “some impact” on Tesla, “but I think it would be devastating for our competitors and [only] hurt Tesla slightly,” he told analysts. “Long term, [it] probably helps Tesla,” he added.The EV tax credit was put in place by the Biden administration as a way to spur EV adoption. Though he didn’t specifically mention the credit, Republican presidential nominee Donald Trump vowed to “end the electric vehicle mandate on day one” in his GOP acceptance speech at the Republican National Convention last week. His running mate, Sen. J.D. Vance, wants to replace it with a gas car incentive.Although subsidies can help stimulate businesses in areas of strategic national importance—competition with China, in the case of EVs—some economists believe they “cause a misalignment between prices and production costs [and] distort markets, prevent efficient outcomes, and divert resources to less productive uses,” the International Monetary Fund says.Musk, who has endorsed Trump for president and is contributing to his campaign, tweeted last week: “Take away the subsidies. It will only help Tesla. Also, remove subsidies from all industries!”On the call, Musk did not elaborate or provide any hard numbers on how eliminating the credit would help Tesla. Currently, the car maker’s homepage prominently advertises the tax credit for the best-selling Model Y and Model 3. (Sales declined 5% year-over-year in Q2 and 8.5% in Q1.)
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Tesla CFO Vaibhav Taneja jumped in to clarify that Tesla seeks to operate a healthy business without government subsidies. “Once you add autonomy to it, it becomes meaningless to…think about the short-term,” Taneja added.Musk reiterated Tesla’s focus on autonomy several times during the call. Issues like the tax credit “are an annoyance relative to autonomy,” he said. “I recommend that anyone who doesn’t believe Tesla will solve autonomy should not hold Tesla stock. They should sell their Tesla stock. All these other questions are noise.”Meanwhile, though he supports Trump, Musk has paused plans to build a new factory in Mexico, given Trump’s promise to impose a hefty tariff on imports. “Trump has said that he will put heavy tariffs on vehicles produced in Mexico, so it doesn’t make sense to invest a lot in Mexico if that is going to be the case,” Musk says. “So we will kind of need to see how things play out politically.”
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