$Tesla(TSLA.US) is Benefiting From End of Tax Cred

$Tesla(TSLA.US) is Benefiting From End of Tax Credit Sales Rush

Barron's -- Al Root

August 10, 2025 10:58am

The third-quarter EV buying rush is on.

Tesla recently increased its estimated wait times for its most popular electric vehicle, the Model Y, to four to six weeks from a recent range of one to three weeks.

It's a signal of more order activity. Higher demand is good news, but there is a catch. This is the last quarter buyers can qualify for the federal purchase tax credit worth up to $7,500. That benefit was eliminated in President Trump's tax and spending bill passed on July 4.

No one knows exactly what will happen to EV pricing and demand in the fourth quarter when the credit goes away. Tesla CEO Elon Musk warned of some " rough quarters" ahead on his company's second quarter earnings conference call, referring to the loss of the credit at a time when Tesla's driverless technology was ramping up.

In the second quarter, Americans bought about 311,000 all-electric cars, down 6% from a year earlier. Tesla sold about 144,000 EVs in the U.S., down almost 13% from a year ago.

Tesla has been beset by falling sales in 2025. Globally, it sold about 334,000 cars in the first quarter and 384,000 cars in the second quarter, down 13% and 13.5% from a year ago, respectively.

Wall Street expects 430,000 cars delivered in the third quarter, according to FactSet. That's an improvement from the second quarter's 384,000 cars, but still down from the 463,000 cars sold globally in the third quarter of 2024.

A Tesla researcher frequently referenced by Wall Street analysts who goes by the name Troy Teslike projects closer to 440,000 cars sold. "With the $7,500 tax credit ending on September 30th, US demand should be strong this quarter, and Tesla will likely be production-limited," wrote Teslike in a recent update.

That's good news for now. Precisely what it means for the fourth quarter and beyond is harder to say.

Coming into the week, Tesla stock was down 18% year to date, but up 65% over the past 12 months. Tesla enters the week with a market value of roughly $1.1 trillion. Investors have brushed off weakening sales, choosing to focus on Tesla's AI efforts. Tesla uses AI computing to train its cars to drive and to create useful humanoid robots. It plans to start selling significant quantities as soon as 2026.

Write to Al Root at allen.root@dowjones.com