Trump Touts Tesla Tax Break That Replaced the $7,500 EV Credit His Bill Killed

President Donald Trump highlighted a vehicle loan interest tax deduction during a November 19, 2025 speech, specifically mentioning Tesla and claiming the policy helps “middle income people” afford cars—four months after the same legislation eliminated the $7,500 EV tax credit that made electric vehicles genuinely affordable for average buyers.

“Middle income people, they don’t know about it. They don’t really have deductions. We’re giving them a deduction on the interest, if they buy one of a nice Tesla car, they borrow the money, you’re so lucky, I’m with you, Elon,” Trump said during remarks, according to a transcript. “I’ll tell you, you are… Has he ever thanked me properly?”

The president clarified the benefit isn’t exclusive to Tesla or electric vehicles. “Although I do let him buy other than electric cars, but these are minor details,” Trump continued. “We’ll let it be for everybody.”

The Policy Behind Trump’s Remarks

Trump’s “One Big Beautiful Bill Act,” signed into law on July 4, 2025, allows taxpayers to deduct up to $10,000 annually in interest paid on vehicle loans for American-assembled cars, trucks, SUVs, vans, and motorcycles purchased between 2025 and 2028, according to Kiplinger.

The deduction applies regardless of powertrain—gasoline, hybrid, or electric—as long as the vehicle’s final assembly occurred in the United States. Unlike most tax deductions, it’s available even to taxpayers who take the standard deduction rather than itemizing, making it an “above-the-line” benefit.

However, the $10,000 maximum comes with significant income restrictions. For single filers earning more than $100,000 or joint filers above $200,000, the deduction decreases by $200 for every $1,000 over those thresholds, CBS News reports. The benefit phases out completely at $150,000 for singles and $250,000 for couples.

What the Deduction Actually Saves Middle-Income Buyers

Despite Trump’s characterization of the policy as helping “middle income people,” automotive analysts say most buyers won’t come close to the $10,000 maximum deduction.

Jonathan Smoke, chief economist at Cox Automotive, told CNBC that only exotic luxury vehicles generate $10,000 in annual interest charges. It would require financing approximately $112,000 to reach the full deduction in year one—the price range of vehicles like a Porsche Panamera or Cadillac Escalade, with monthly payments exceeding $2,000.

For the average American car buyer financing $44,000 over six years, the first-year interest deduction totals roughly $3,000, declining in subsequent years as principal payments increase, according to the American Financial Services Association.

Because deductions reduce taxable income rather than providing direct savings, a buyer in the 22% tax bracket claiming a $3,000 deduction saves approximately $660 on their actual tax bill. Smoke calculated the real-world benefit as “$500 or less in year one,” with declining value afterward.

By contrast, the eliminated EV tax credit provided up to $7,500 as an immediate discount at purchase, either applied directly to the vehicle price or claimed as a refundable credit on tax returns.

The September 30 EV Credit Expiration

The same Big Beautiful Bill that created the loan interest deduction terminated the $7,500 federal tax credit for new EVs and $4,000 credit for used EVs on September 30, 2025—accelerating an end date that had originally been set for 2032 under the Biden administration’s Inflation Reduction Act.

Bloomberg reported that the $3.4 trillion legislation primarily benefits the wealthiest Americans while eliminating clean energy subsidies and slashing Medicaid. The vehicle loan interest provision was presented as aid to the $1.6 trillion U.S. auto industry.

EV sales surged in the months leading up to the September 30 deadline as consumers rushed to claim the expiring credit. CNBC reported that July 2025 saw nearly 130,100 new EV sales, the second-highest monthly total on record, with dealers offering approximately $9,800 in additional incentives—worth about 17.5% of average transaction prices.

Post-Subsidy Market Collapse

The elimination of EV subsidies triggered exactly the market collapse that industry analysts had predicted. October 2025 EV sales dropped 24% compared to September, with unadjusted sales falling from 98,289 units to just 74,897 units in a single month, according to market analysis firm Omdia.

Cox Automotive senior analyst Stephanie Valdez Streaty warned that EV sales were likely to “collapse” in the fourth quarter once the tax credit expired and the market adjusted to the new financial reality.

General Motors announced in late October it would lay off more than 3,400 workers across battery plants and EV facilities, with CFO Paul Jacobson stating the company expects “EV demand growth to slow pretty significantly.” Ford halted F-150 Lightning production indefinitely, while the company’s Model E electric vehicle division lost $3.6 billion through the first nine months of 2025.

Trump’s Complicated Tesla History

Trump’s November 19 comments praising Tesla mark a striking shift from the bitter public feud between the president and Tesla CEO Elon Musk that erupted in summer 2025 over the Big Beautiful Bill itself.

In July 2025, Trump threatened to terminate federal subsidies and contracts for Musk’s companies, posting on Truth Social:

“Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa.”

Musk fired back, declaring “I am literally saying CUT IT ALL. Now,” and calling the Big Beautiful Bill a “disgusting abomination.” The clash sent Tesla shares down more than 6% in premarket trading.

By June 2025, Trump had sold his own red Tesla Model S after purchasing it in March for $80,000 and showcasing it during a White House demonstration. The Daily Beast reported Trump’s decision to part with the vehicle followed the escalating tensions with Musk.

Trump’s November remarks also included a reference to eliminating EV mandates, stating: “We had a mandate. Which even Elon thought was ridiculous, that everybody has to have an electric car by 2030. And once, fortunately, he said, That’s a ridiculous thing.”

No federal law has ever mandated that Americans purchase electric vehicles, though the Biden administration did implement EPA emissions standards that Republicans argued effectively served as EV mandates by making it costly for automakers not to produce more electric models.

EVXL’s Take

This announcement feels like a victory lap for a policy that’s been law since July 4, delivered four months after it helped crater the EV market Trump claims to support. Let’s be clear about what actually happened here: Trump eliminated a $7,500 point-of-sale credit that made EVs accessible to middle-class families, replaced it with a tax deduction worth maybe $660 in actual first-year savings for average buyers, and is now calling that replacement a gift to “middle income people” while specifically name-checking the company whose CEO spent $250 million getting him elected.

We warned this would happen. Back in July when the Big Beautiful Bill passed, EVXL explained that industry analysts predicted a 72% drop in planned EV sales over the next decade. By November, those predictions were reality—October EV sales collapsed 24% as the post-subsidy chickens came home to roost. General Motors laid off 3,400 workers, Ford stopped making the F-150 Lightning, and America’s $28 billion Battery Belt devolved into ghost towns of idled plants and mass layoffs.

Meanwhile, Toyota just announced a $912 million investment in U.S. hybrid production while Detroit’s Big Three hemorrhage money on subsidy-dependent EV strategies that evaporated on September 30. That’s the real story—the automaker that never went all-in on EVs is expanding capacity for vehicles people actually buy without needing taxpayer subsidies, while competitors who bet everything on government incentives are now in strategic retreat.

The loan interest deduction isn’t worthless, but let’s not pretend it’s comparable to what it replaced. A middle-class family financing a $44,000 vehicle saves about $660 on next year’s taxes versus the $7,500 they could have knocked off the purchase price before September 30. The only people getting anywhere near that $10,000 maximum are wealthy buyers financing six-figure luxury vehicles—exactly the demographic that least needs tax relief for car purchases.

And then there’s the Tesla angle. Four months ago, Trump and Musk were in a public brawl over this exact legislation, with Trump threatening to cancel Tesla’s federal contracts and Musk calling the bill a “disgusting abomination.” Trump literally sold his Tesla Model S in June after their feud escalated. Now he’s back to praising the company, asking if Elon has thanked him properly, and positioning the loan deduction as some kind of favor to Tesla—even while clarifying it applies to all automakers, not just EVs.

The timing matters. Why tout this policy in November when it’s been law since July and took effect January 1? Because the post-subsidy EV market collapse is now undeniable, layoffs are mounting, and someone needs to pretend there’s still government support for American EV manufacturing. The loan deduction provides that political cover while delivering a fraction of the actual financial support the eliminated tax credit provided.

What do you think about Trump’s characterization of the loan interest deduction as helping middle-income buyers? Share your thoughts in the comments below.