On May 30, 2025, Tesla and its CEO Elon Musk publicly criticized a Republican megabill that aims to eliminate clean energy tax credits, a move that could disrupt the electric vehicle (EV) and solar industries. The House-passed reconciliation package, which would end residential solar credits and EV incentives by the end of the year, has sparked a heated response from Tesla, with Musk amplifying the company’s stance just hours after announcing his departure from the Trump administration, reports Politico.

Tesla’s Warning: Grid Reliability at Risk

Tesla Energy, the company’s solar and battery division, issued a stark warning on X, stating:

“Abruptly ending the energy tax credits would threaten America’s energy independence and the reliability of our grid.”

This statement underscores the potential consequences of the megabill, which would phase down clean electric investment credits for all forms of generation except nuclear, while also terminating EV credits worth up to $7,500 per vehicle. Tesla argues that these incentives are critical for maintaining grid stability, especially as demand for AI and domestic manufacturing grows, requiring over 60 gigawatts of capacity deployment annually.

The loss of these credits could disproportionately affect Tesla, which relies on them to make its EVs and energy storage solutions more affordable. For instance, the $7,500 EV credit directly reduces the cost of models like the Tesla Model 3, making them more competitive against gas-powered vehicles. Without this incentive, Tesla warns that competitors more reliant on fossil fuels could gain an edge, as Musk noted on X: “There is no change to tax incentives for oil & gas, just EV/solar.”

Industry Pushback and Economic Concerns

Tesla Energy has urged the Senate to support a more gradual wind-down of these credits, emphasizing the need for “continued speedy deployment” to meet energy demands. The company’s energy division, which has outpaced its vehicle business in growth and profitability since Musk launched its battery storage products like Powerpack in 2015, serves both homeowners and utility companies. A sudden removal of credits could slow the adoption of solar and battery systems, which are increasingly vital for managing peak loads and reducing reliance on fossil fuels.

Economically, the megabill’s impact could be significant. Tesla is already navigating declining sales and backlash linked to Musk’s efforts to reduce the federal workforce, which the company claims has strained its operations. The additional loss of EV credits could further challenge Tesla’s market position, especially as competitors in the EV space—like Ford and GM—may also struggle without these incentives but are less dependent on clean energy subsidies overall.

Musk’s Evolving Role and Industry Dynamics

Musk’s recent comments add another layer of complexity. Last month, he expressed readiness to step back from government roles to focus on running Tesla, confirming on May 28, 2025, that his tenure as a “special government employee” would end.

However, his vocal support for ending all government subsidies, including those for EVs and fossil fuels, contrasts with Tesla’s current stance. Musk has argued that Tesla would benefit from the removal of EV credits because “its competitors are more reliant on it,” a position that has drawn criticism from the oil lobby, which defends its tax breaks as standard corporate deductions.

The megabill, which Musk called “disappointing” due to its $2 trillion price tag, also contradicts his efforts in the Department of Government Efficiency to cut costs. As the EV and solar industries brace for potential changes, Tesla’s pushback highlights the broader tension between clean energy growth and fiscal policy, with significant implications for EV owners, solar adopters, and the future of America’s energy grid.