Tesla is raising the alarm over a looming shift in the U.S. auto market, warning customers to place their orders now or risk losing out on access to its electric vehicles as President Donald Trump’s newly signed tax law ends the federal EV tax credit.
The move, which removes the $7,500 electric vehicle incentive effective September 30, is already reshaping the market, with Tesla scrambling to sell its inventory and American automakers bracing for a turbulent second half of the year.
“Given the abrupt change, we have limited supply of vehicles in the US this quarter,” said Tesla CFO Vaibhav Taneja on the company’s earnings call. “If you are in the US and looking to buy a car, place your order now as we may not be able to guarantee delivery orders placed in the later part of August and beyond.”
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The warning follows the passage of legislation extending Trump’s 2017 tax cuts while removing critical green energy subsidies—a development industry analysts say could tilt the balance of power in favor of smaller EV startups like Lucid and Rivian, who are less dependent on the tax credit.
In response, Tesla has rolled out a series of time-limited incentives, including free Supercharging, a Full Self-Driving trial, and a $1,000 discount for military personnel, teachers, and first responders, as it pushes to move vehicles before the September deadline.
Tariffs Add to Tesla’s Troubles as “Weird Transition Period” Unfolds
Tesla’s top executives also pointed to the Trump administration’s tariff policies as a mounting challenge, with the company incurring $300 million in additional costs this quarter due to trade-related duties.
“We are in an unpredictable environment on the tariff front,” Taneja said.
CEO Elon Musk described the present moment as a “weird transition period” as Tesla tries to navigate not only the expiration of tax incentives but also regulatory ambiguity surrounding autonomous driving technologies.
U.S. Automakers Face Disadvantage as Foreign Brands Gain Ground
Tesla’s concerns reflect a broader anxiety across American manufacturers, who say the combined impact of tariff hikes and policy rollbacks is placing U.S. automakers at a structural disadvantage.
Spencer Hakimian, founder of Tolou Capital Management, echoed those concerns in a note reacting to a recent 15% tariff on foreign autos, which investors see as giving Japanese carmakers an edge.
“Toyota is up +8% on the news of a 15% tariff. Why? It’s simple,” Hakimian explained. “Ford, GM, Tesla, and all the other American manufacturers are going to be paying 50% more for their steel, 50% more for their copper, 25% more for their Canadian production, 25% more for their Mexican production, and 55% on their Chinese production. Toyota only has to pay 15% more and they’re done with all the shenanigans. Ford has to pay much more than that. A lot more in fact. We’ve given a Japanese car company an advantage over American car companies. All in hope of bringing auto jobs back to America.”
Industry analysts say the combination of tariff hikes and subsidy removals may backfire, with American firms bearing disproportionate costs while foreign competitors, like Toyota and Hyundai, sidestep the worst of the trade penalties.
Weak Earnings Underscore Market Shift
Tesla’s Q2 2025 earnings report reflected the deepening pressure. The company posted $22.5 billion in revenue, its sharpest quarterly decline in 10 years, falling short of Wall Street expectations. Earnings per share landed at 40 cents, versus a projected 42 cents. The company delivered 384,000 vehicles in the quarter ending June, a modest achievement in an increasingly volatile market.
Tesla’s stock fell over 4% in after-hours trading, contributing to a 17.6% year-to-date decline.
As the countdown to the tax credit sunset continues, Tesla’s message to Americans is that the window is closing fast. With tax incentives vanishing and tariff costs escalating, the affordability and accessibility of Tesla’s EVs—once seen as central to America’s energy transition—are now under threat.
And Tesla isn’t the only one sounding the alarm. Across the industry, U.S. automakers are preparing for a future defined more by political and regulatory maneuvering than market forces, with customers caught in the crossfire.