The U.S. House of Representatives passed President Donald Trump's tax bill early Thursday, sending the package to the Senate. The legislation is broad in scope and repeals several Biden-era tax credits and policies aimed at supporting EV adoption. Tesla stock moved higher and other EV stocks fell in Thursday's stock market.
Trump's tax bill does away with major portions of former President Joe Biden's Inflation Reduction Act, known as the IRA, which includes tax credits of up to $7,500 for EV purchases among many other incentives. While the House-passed tax and spending bill would repeal many EV incentives, it also includes a provision for the Federal Highway Administration to impose a $250 annual fee registration for an EV vehicle and a $100 annual fee for hybrid vehicles.
This provision aims to make sure that EV operators pay to maintain U.S. roads in lieu of a gasoline tax. Thirty-seven states already collect annual EV fees ranging from $50 to $250 a year.
Tesla stock advanced 1.9% to 341.04 during Thursday's stock market action after sliding 2.7% on Wednesday. EV startups Rivian and Lucid both fell more than 2%.
Ford fell 0.4% while General Motors edged down 0.2% on Thursday's stock market.
Tesla Stock: Tax Bill Repeals $7,500 Incentive
The IRA tax break of up to $7,500 for an EV purchase comes to an end at the end of 2025 under the House-passed tax bill. The Inflation Reduction Act has the incentives available through 2032.
See EV Tax Credits 2025: $7,500 Is Up For Grabs. Here's How To Get It.
However, the tax bill does include a "special rule" to keep IRA tax credits in place through "taxable year" 2026 but only for automakers that haven't yet sold 200,000 EV units by the end of 2025.
This would mean that Tesla, General Motors, Ford and others would not be able to take advantage. However, this would give extra runway for Rivian, Lucid and other EV startups.
Read Used EV Tax Credits 2025: Here's How To Get $4,000
Meanwhile, the Trump tax bill would also repeal the commercial clean vehicle tax credit, hitting Tesla with its long-haul trucking Semi product.
Under the IRA, taxpayers can claim a tax credit for commercial clean vehicles placed in service in a taxable year. For vehicles weighing less than 14,000 pounds the credit value is $7,500 and for other vehicles the credit value is $40,000. The credit is already set to expire at the end of 2032.
The House-passed bill sets the expiration date at the end of 2025, but also includes a special rule allowing vehicles acquired pursuant to a written binding contract entered into before May 12, 2025, to qualify for the credit.
Currently, 10 Tesla vehicle models qualify for the $7,500 IRA tax credit. Three of Ford's electric F-15o Lightning variants qualify as well as many other makes, according to the Internal Revenue Service.
Battery Tech Incentive On The Chopping Block
The House Republican tax bill also restricts and phases out the IRA's "advanced manufacturing production credit."
Under current law, there is a tax credit for certain inverters, solar energy components, wind energy components, battery components manufactured and critical minerals produced. Currently for components sold in 2030 there is a 25% reduction to the credit with reduction going up to 50% in 2031 and then 75% in 2032. In the IRA, the advanced manufacturing credit disappears at the end of 2032, but the credit for critical mineral production is permanent.
The House-passed tax bill eliminates the tax credit for wind energy components sold after the end of 2027 and eliminates the credit for all other components at the end of 2031. The provision would also restrict access to the credit for "certain prohibited foreign entities."
Clean Energy Investment Also Would Go
The bill also would strip away IRA clean energy storage provisions, such as the clean electricity investment credit.
Under current law, there is a credit for qualified investment in an electricity facility or energy storage technology.
The House-passed bill would phase out the clean electricity investment credit. In the bill, there is a 20% credit reduction for facilities placed in service in 2029, a 40% reduction for facilities placed in service in 2030 and a 60% reduction in 2031. The tax credit ends at the end of 2031.
Tesla has taken advantage of these IRA provision for its battery storage business.
Meanwhile, the House bill also eliminates at the end of 2025 the residential clean energy credit.
Tesla Stock To Be Affected?
U.S. EV makers are bound to be hit by the repeal of the IRA EV tax credits of up to $7,500. Tesla vehicle sales have already hit a rough patch in recent quarters.
Tesla stock is up 20% in May. On May 9, shares blasted above the 200-day moving average, offering investors an aggressive entry. However, Tesla is stock is now extended.
Shares are still down about 15.5% this year as of Thursday's stock market close, even as it has surged as the general analyst consensus was positive coming out of the Q1 conference call. There is also still significant overhead, with shares down 30% from its 488.54 peak on Dec. 18.
Tesla Chief Executive Elon Musk is focused on a limited robotaxi rollout next month in Austin.
"We've lost some sales perhaps on the left, but we've gained them on the right," Musk said in an interview Tuesday at Bloomberg's Qatar Economic Forum in Abu Dhabi, referring to left-wing and ring-wing consumers. "The sales numbers at this point are strong and we see no problem with demand."
Tesla stock has a 21-day average true range of 5.46%. The ATR metric is available on IBD's MarketSurge charting tool that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
Tesla stock has a 79 Composite Rating out of a best-possible 99. Shares also have a 92 Relative Strength Rating and a 59 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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