Tesla’s clean energy business, once a quietly growing part of Elon Musk’s corporate empire, is facing its most serious political threat yet — a direct result, many observers say, of Musk’s vocal alignment with the American Right and the Republican Party’s aggressive push to dismantle climate policies.
House Republicans last week passed a sweeping reconciliation bill that seeks to unravel much of the Inflation Reduction Act (IRA), the landmark 2022 law that unlocked billions in clean energy tax credits. If passed by the Senate in its current form, the bill would slash incentives for both residential and utility-scale solar — incentives that have powered Tesla Energy’s rapid rise amid softening demand for its electric vehicles.
Tesla’s solar and energy storage unit reported $2.7 billion in revenue in the first quarter of 2025, up 67% from a year earlier. But that surge now hangs in the balance. The proposed bill would end residential solar credits four years earlier than planned and impose immediate constraints on developers, requiring construction to begin within 60 days of the law’s passage.
In public, Tesla has issued pleas for a “sensible wind down” of the tax credits to avoid undercutting deployment of solar and grid-scale batteries, which the company says are essential to American energy independence and the country’s ability to support rising AI-powered infrastructure.
Musk’s Alliance with the Right
But behind the industry backlash lies a political calculus that is increasingly scrutinizing Elon Musk himself — a billionaire entrepreneur whose public allegiance to Trump and the far-right policy orbit is now being viewed as self-defeating.
Over the past two years, Musk has openly embraced key figures of the American Right, including Donald Trump, whose administration has made fossil fuel expansion a top priority. Musk has amplified far-right influencers on X (formerly Twitter), rolled back misinformation rules that had been used to curb climate denial, and criticized environmental regulations and government subsidies — even as his companies continue to benefit from both.
While Tesla was founded on the premise of accelerating the world’s transition to clean energy, its CEO has increasingly positioned himself in a political lane hostile to those very goals. That contradiction is now coming to a head.
Trump-era figures and many Republicans in Congress have never disguised their skepticism — or outright hostility — toward green subsidies. Trump himself has routinely mocked electric cars, dismissed climate change as a hoax, and rolled back Obama-era fuel efficiency rules during his first term.
Now again, Trump and the GOP lawmakers have stepped up efforts to undercut the climate law that President Joe Biden made a centerpiece of his economic agenda. That law has catalyzed more than $300 billion in clean energy investments nationwide.
Musk, despite knowing the risks, has remained a vocal supporter of the movement seeking to tear it down.
Growing Apathy and Market Fallout
This has also affected Tesla, shifting the EV’s support base. Once hailed as a climate hero and innovation icon, Musk’s image has become polarizing, especially among younger, left-leaning climate-conscious consumers who once made up Tesla’s core market.
Surveys show declining enthusiasm for Tesla among Democrats and centrists. Meanwhile, Republican-led attacks on the EV industry, from rolled-back fuel standards to derailed charging infrastructure plans, have left Tesla exposed to a hostile political climate it arguably helped shape.
On Wall Street, the signs are already visible. Solar stocks have plummeted this year amid fears that the IRA’s provisions may be repealed. Enphase is down 45%, Sunrun has dropped 25%, and First Solar is off by 15%. Tesla’s energy arm, heavily reliant on those same credits, faces similar headwinds.
The irony is that Tesla, often cited as the single biggest success story of the clean energy transition — is now lobbying frantically to preserve policies that its CEO has politically abandoned.
“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,” Tesla Energy wrote.
“This will ensure continued speedy deployment of over 60 GW capacity per year to support AI and domestic manufacturing growth.”
But many Senate Republicans appear unmoved, and Democrats have only a narrow majority with which to fight off the repeal effort. The reconciliation bill’s future remains uncertain, but the political climate is undeniably shifting against Tesla — and much of that shift can be traced to the man at the center of it all.
The Cost of Political Contradictions
Musk’s business empire was built, in no small part, on government intervention. A $465 million federal loan jumpstarted Tesla in 2009. Since 2012, Tesla has earned nearly a third of its $32 billion in profits from selling emissions credits to other automakers. The IRA’s generous tax incentives helped turbocharge its clean energy division at a moment when EV sales are weakening globally.
Yet Musk has increasingly painted government support as unnecessary or unwise, arguing that markets, not policy, should determine success. This philosophical detour, while popular in libertarian and far-right circles, now threatens to undermine the very industries he leads.
Whether the Senate preserves the IRA’s clean energy credits or allows them to be gutted, Tesla is already suffering the reputational and strategic fallout of Musk’s political choices. And with Trump’s influence growing again on Capitol Hill, the pressure on Tesla’s energy division, once its quiet success story, appears to only just beginning.
