Tesla, Rivian, and Lucid Are Set for a Major Turning Point Today, September 30, Thanks to President Donald Trump

Whenever a new president takes office, it’s typical to see various changes unfold, whether through new legislation or executive actions. Since Donald Trump assumed the presidency just over eight months ago, we’ve observed numerous modifications to Social Security and the enactment of his signature tax and spending legislation, known as the "Big, Beautiful Bill."

Trump’s Big, Beautiful Bill brought about several tax advantages for certain groups, such as an increased standard deduction for qualifying seniors between 2025 and 2028, along with partial deductions for tips and overtime pay for eligible employees during that same period. However, it also eliminated some key benefits.

In particular, Trump’s legislation has altered the landscape for the electric vehicle (EV) sector and its top dedicated manufacturers, including Tesla ( TSLA -0.88%), Rivian Automotive ( RIVN -4.49%), and Lucid Group ( LCID -2.99%), as of September 30.

EV manufacturers lose a vital incentive

Among the many tax and credit revisions in the president’s Big, Beautiful Bill is a new, shorter deadline for the $7,500 tax credit that buyers received for purchasing a qualifying new EV or plug-in hybrid, as well as the $4,000 credit for used EVs. This credit previously applied to new vans, SUVs, and trucks with a manufacturer’s suggested retail price (MSRP) under $80,000, and new sedans with an MSRP up to $55,000.

Although this incentive—officially called the Clean Vehicle Credit—was originally set to expire in 2032 under the Inflation Reduction Act, Trump’s Big, Beautiful Bill brings the EV purchase credit to a close as of today, September 30. Any qualifying new vehicles bought after this date will no longer be eligible for the $7,500 credit.

This tax credit covered a large portion of Tesla’s lineup, including the Model 3 Sedan, the all-wheel drive Model X SUV, both single and dual motor Cybertruck versions, and several Model Y SUV variants. While most of Rivian’s and Lucid’s vehicles are priced above the threshold for tax credits, both companies had planned to use leases on upcoming models to benefit from the $7,500 EV credit.

This incentive acted as a crucial motivator, helping pure-play EV makers offer more competitive prices compared to traditional internal combustion engine (ICE) vehicles. With EV charging infrastructure still not fully developed nationwide, being able to undercut ICE vehicles on price is almost essential.

Without this initial price benefit, it’s probable that more consumers will choose conventional gasoline or diesel vehicles, given the widespread availability of ICE refueling and the time savings. While refueling an ICE car takes only a few minutes, charging an EV can range from an hour to an entire day, depending on the charger type.

But that’s not the only setback

Yet, the loss of this valuable tax credit isn’t the sole way Trump’s Big, Beautiful Bill is shaking up the pure-play EV industry.

When the president signed his hallmark tax and spending bill into law on July 4, 2025, it abolished corporate average fuel economy (CAFE) penalties and retroactively removed fines for the 2022 model year and all years after.

CAFE standards set the required fuel efficiency for vehicles, as determined by the National Highway Traffic and Safety Administration, to encourage the production of more fuel-efficient cars and reduce dependence on fossil fuels. Automakers that didn’t meet these benchmarks faced penalties. With Trump’s law eliminating these civil penalties, automakers are no longer financially motivated to achieve high fuel economy targets.

This change is almost certain to negatively affect the profitability of Tesla, Rivian Automotive, and Lucid Group.

Government agencies issue regulatory credits to these dedicated EV manufacturers, who then sell the credits to traditional automakers that fall short of compliance. For Tesla, in particular, selling these credits is a major contributor to its earnings. Without this revenue, Elon Musk’s company would have posted a pre-tax loss in the first quarter of 2025.

With the enforcement of CAFE standards effectively removed by the Big, Beautiful Bill, the U.S. market for automotive regulatory credits is expected to shrink dramatically. This could reveal that Tesla, a favorite among Wall Street investors, has been relying heavily on non-core sources like regulatory credit sales and interest income for more than half its pre-tax profits.

Rivian and Lucid will also see their regulatory credit revenue dwindle. While Tesla has managed to stay profitable for five years in a row (thanks in part to these credits), Rivian and Lucid are still incurring significant losses as they expand and try to establish themselves in the auto industry. Even with large cash reserves and strong financial backers, there’s no certainty of long-term success for either company.

Although I wouldn’t claim that Donald Trump has completely destroyed the EV industry, his policies will almost certainly reduce the number of players and make it much harder for dedicated electric vehicle companies to compete with traditional ICE automakers.