In a striking reversal, Tesla and its outspoken CEO Elon Musk are now advocating for a tax incentive they once campaigned to abolish. The same $7,500 federal tax credit for electric vehicle (EV) buyers that Musk dismissed as unnecessary is now being defended as essential – both for America’s energy future and Tesla’s own survival.

Last year, Musk boldly declared on X (formerly Twitter), “Take away the subsidies. It will only help Tesla,” calling for an end to all government handouts across industries. Fast forward to today, Tesla is pushing back against a Republican-led budget bill – dubbed the “Big Beautiful Bill” – that seeks to eliminate the EV tax credit altogether.

Tesla’s solar division recently posted on X, warning that “abruptly ending the energy tax credits would threaten America’s energy independence and the reliability of our grid.” Musk added that the bill’s cuts target clean energy while leaving oil and gas subsidies untouched – a move he called “very unfair!!”

The shift in Musk’s tone may reflect Tesla’s rocky start to 2025. Once seen as the trailblazer immune to industry disruptions, Tesla has now faced a rare dip in sales and its largest quarterly earnings decline to date. Experts once believed Tesla could thrive without subsidies, while legacy automakers faltered. But the numbers now tell a different story.

In Q1 2025, Tesla’s net income plummeted by 71%, while EV sales dropped sharply in the U.S., Europe, and China. With consumers increasingly hesitant and the competition catching up, Tesla now finds itself needing every bit of demand stimulus it can get – including that tax credit.

JPMorgan estimates that losing the EV credit could cost Tesla a staggering $1.2 billion annually. That's enough to shake even the most confident executive.

Musk’s opposition to the Republican tax bill has drawn the ire of former ally and ex-president Donald Trump, who blasted Musk for suddenly criticizing a bill he allegedly knew inside out. “Elon and I had a great relationship. I don’t know if we will anymore,” Trump told reporters. “He only developed a problem after we cut the EV mandate.”

But Musk quickly denied that the EV credit was his central issue, insisting his real concern lies in the excessive spending hidden in the bill. “Keep the EV/solar incentive cuts in the bill... but ditch the MOUNTAIN of DISGUSTING PORK,” he wrote on X.

Despite Musk’s protestations, Tesla stock (TSLA) sank 14% following the exchange, underscoring investor anxiety.

Even Tesla's long-time supporters on Wall Street are growing uneasy. CFRA’s Garrett Nelson, who once argued that the credit’s removal would widen Tesla’s lead over competitors, is now walking that back. “The ‘Big Beautiful Bill’ would be a net negative for Tesla,” Nelson said, citing both the tax credit cuts and Tesla’s faltering market share overseas.

Dan Ives of Wedbush echoed the sentiment: “Musk has definitely changed his tune… Tesla needs all the demand help it can get.”

Under the proposed legislation, newer EV brands like Rivian and Lucid may still qualify for credits, while Tesla – ironically – would not. According to Bank of America’s John Murphy, this could leave Tesla at a serious disadvantage, especially given that American EV enthusiasm seems to be tapering off.

“I think 8% market share might be the high water mark for EV,” Murphy said this week. “With no fresh models on the horizon and no low-cost Tesla in sight, Musk may find it increasingly difficult to grow volume.”

What began as an ideological fight against government support has now become a survival issue. Tesla’s about-face on EV tax credits isn’t just about numbers; it’s a reflection of the turbulent market, political headwinds, and the shifting ambitions of one of the most controversial figures in tech.

From dismissing subsidies to desperately needing them, Tesla’s journey highlights just how quickly fortunes can change – even for industry giants.