Tesla has made its first move to counter the loss of the $7,500 electric vehicle tax credit by offering a $6,500 lease credit, which it is offering internally.

Essentially, Tesla is reducing the price of a vehicle for those who choose to lease the vehicle by $6,500, which is a bit of a double-edged sword. However, it appears the company had this strategy ready to fire with the expiration of the EV tax credit, which occurred last night.Tesla is offering the lease credit automatically, it says on its website, as the monthly payment amount already reflects the $6,500 discount. The company said in its terms:

“Monthly lease payment already includes the $6,500 Tesla lease credit, which is subject to change or end at any time. Order does not guarantee eligibility.”

The lease credit offer mostly offsets the loss of the tax credit, although, from a financial standpoint, it seems Tesla will take a bit of a hit in its profit margins. It will be interesting to see how long the company maintains the lease incentive because of its pressure on profits.

Lease pricing for the Model 3 and Model Y was also adjusted by Tesla after the expiration of the tax credit at midnight. The company increased these prices by up to 11 percent, as the Model Y’s payment range increased from $479 to $529 to between $529 and $599.

Model 3 prices came up from between $349 and $699 to $429 and $759.

These are with default options, including $3,000 down, a 36-month lease period, and 10,000 miles per year.

How Tesla’s sales will respond to the removal of the tax credit is one of the more discussed topics in the community over the past few months.

It was relatively evident that the Trump Administration planned to get rid of any subsidies for electric vehicles, something that Tesla CEO Elon Musk supported.

However, the true impact likely will not be seen until Q1 2026, as the credit will still be applied to any order placed before September 30. Leases do not apply to this condition, as deliveries had to be completed by yesterday to apply. Deliveries made after September 30 must be financed or paid for in cash.

INSIDE TESLA: Female engineer exposes forced resignation, gag threats, and deportation fears—Musk branded “pure evil” .

A Tesla engineer has accused Tesla of threatening her team with deportation after bringing up a brake safety issue with CEO Elon Musk in 2014.

Balan was fired after informing Musk that she was worried floor carpets could curl up underneath the pedals in Model S vehicles, she says, in a major braking safety hazard.

According to Balan, she was simply following Musk’s orders to “talk to me” if staffers thought it was the “fastest way to solve a problem for the benefit of the whole company,” according to an email he sent to all employees in 2013, as quoted by Electrek.

Instead of listening to her concerns, Balan says that a team of Tesla lawyers threatened to deport members of her team who were waiting on green card applications, if she didn’t resign on the spot — which she did, in protest. The members had stood behind her decision to raise flags over the floor carpet issue.

The former engineer, who has been in remission for stage 3 breast cancer, called Musk a “monster” and “pure evil” in an interview with The Times of London, revealing that she’s extending her already years-long legal battle against the mercurial CEO and his carmaker.

It’s yet another instance of Tesla employees becoming victims of  Musk’s infamously vindictive and unpredictable management style. Workers have had to deal with unsafe working conditions, long hours, rampant racism, mass layoffs, and retaliation from the upper ranks.

Musk has garnered a reputation for firing employees who speak up. Case in point, last year, Musk sacked the company’s 500-worker-strong Supercharger team, dumbfounding investors. According to staffers, the company’s former head of EV charging, Rebecca Tinucci, had angered him during a one-on-one meeting shortly before the team was fired.

Balan has been caught up in the messy legal battle for over a decade now. After being fired, Tesla publicly accused her of embezzling company funds for a so-called “secret project,” accusations she has repeatedly denied. The incident motivated her to sue Tesla for defamation in 2019. However, an arbitrator ruled in favor of the carmaker due to California’s statute of limitations.

Tesla then tried to confirm the arbitration ruling by bringing the case back to a district court in California. But Balan won an appeal against the decision last week, opening up new legal possibilities for her case.

“We are hoping we will start a new lawsuit and we will have the chance to take on Elon Musk in front of a jury and judge,” she told the BBC.

It remains to be seen where the legal spat will land, and experts agree it will likely take time for the battle to reach its conclusion.

To many of them, Tesla’s vindictive behavior isn’t anything new.

“Tesla is among the many corporations that force employees and customers into opaque arbitration processes and deploy aggressive strategies to retaliate against employees who voice criticism of corporate practices,” Stanford professor Anat Admati told the BBC.

Balan’s attorney, Bill Moran, has vowed to “revive” the case, saying in a statement that “we are confident we can secure her either a new arbitration or alternatively a trial in court so that her case can be heard on the merits after so many years.”

Tesla loses EV crown to China’s BYD as competition, tax credit expiry hit demand

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Tesla ceded its crown as the world’s top electric vehicle maker to China’s BYD after annual sales fell for a second year, hit by rising competition, the expiry of U.S. tax credits and brand backlash.

With global EV sales rising 28% last year, BYD outsold Tesla for the first time on an annual basis, helped by rapid growth in Europe, where the Chinese automaker has been widening its lead over the U.S. rival.

Tesla, whose sales fell about 8.6% in 2025, is facing intense competition, especially in Europe, raising questions about its ability to revive the core auto business as CEO Elon Musk steers the company towards robotaxis and humanoid robots.

Shares of the company fell about 2% in afternoon trading.

“Investors are so focused on the future with Tesla that they are ignoring delivery numbers. It’s about Optimus, Robotaxi and physical AI,” said Dennis Dick, a trader at Triple D Trading, which owns Tesla shares.

Tesla’s fourth-quarter figures come after third-quarter deliveries were supported by a rush to lock in $7,500 in federal tax credits after President Donald Trump’s administration decided to pull the plug on the incentive in September.

In the U.S., EVs accounted for 6.2% of retail vehicle sales in the quarter, down 3.6 percentage points from a year earlier, while average transaction prices rose nearly $6,000 to $53,300, according to J.D. Power data.

Tesla said it delivered 418,227 vehicles in the October-December quarter, down 15.6% from 495,570 a year earlier. Analysts expected 434,487 vehicles, or a 12.3% drop, according to Visible Alpha.

For the full year, Tesla delivered 1.64 million vehicles, compared with 1.79 million in 2024. Analysts polled by Visible Alpha had expected deliveries of about 1.65 million vehicles.

The decline in deliveries was not a major surprise, given the market had already priced in weaker demand after U.S. EV tax credits ended, said Seth Goldstein, senior equity research analyst at Morningstar.

Meanwhile, Tesla said it deployed 14.2 GWh of energy storage products, a record high. It is set to report fourth-quarter results on January 28.

Growing competition from Chinese and European automakers such as BYD, Volkswagen and BMW has weighed on Tesla’s sales momentum.

Tesla registrations declined across much of Europe in December but jumped in Norway, where record sales contrasted with shrinking market share in rest of the region in 2025.

BYD said sales outside of China climbed to a record 1 million vehicles in 2025, up about 150% from 2024. The company has said it aimed to sell as many as 1.6 million vehicles outside China in 2026, though it has not disclosed an overall sales target.

Tesla in October launched stripped-down “Standard” versions of the Model Y and Model 3, priced about $5,000 below the previous base models, as it sought to defend sales volumes after the tax credit loss and appeal to customers in Europe looking for cheaper options.

The move disappointed some investors who had expected a larger price cut or a meaningfully new mass-market product.

Even as vehicle deliveries have weakened, Tesla shares rose about 11.4% in 2025, boosting Musk’s wealth.

Tesla loses EV crown to China’s BYD on competition, end of US tax credit

US electric-vehicle maker outsold by Chinese rival for first time on annual basis

Tesla’s 2025 deliveries figure raises questions about whether the company can stabilize its core auto business following two consecutive years of sales declines. © Reuters

January 3, 2026 01:15 JST

 

(Reuters) — Tesla ceded its crown as the world’s top electric-vehicle maker to China’s BYD after annual sales fell for a second year, with intensifying competition, the expiration of U.S. tax credits and damage to the automaker’s brand hurting demand.

With global EV sales rising 28% last year, BYD outsold Tesla for the first time on an annual basis, helped by rapid growth in Europe, where the Chinese automaker has been widening its lead over the U.S. rival.

The annual deliveries figure raises questions about whether Tesla can stabilize its core auto business following two consecutive years of sales declines, even as it pivots to futuristic projects such as robotics and self-driving cars to justify its steep valuation.

Tesla shares were marginally up in early trading.

“I think the market remains focused on the robotaxi business, where Tesla is testing its Cybercab in Austin,” said Seth Goldstein, senior equity research analyst at Morningstar.

“If deliveries can continue to not be down too much in the coming quarters, I expect market sentiment around the robotaxi will continue to drive the stock,” Goldstein added.

Tesla’s fourth-quarter figures come after third-quarter deliveries were supported by a rush to lock in U.S. EV tax credits before they expired at the end of September, followed by a sharper slowdown as incentives rolled off.

EV demand has softened in the U.S. since the end of September, when President Donald Trump’s administration ended $7,500 federal tax credits.

Tesla said it delivered 418,227 vehicles in the October-December quarter, down 15.6% from 495,570 a year earlier. Analysts expected 434,487 vehicles or a 12.3% drop, according to Visible Alpha.

For the full year, Tesla delivered 1.64 million vehicles, compared with 1.79 million in 2024. Analysts polled by Visible Alpha had expected deliveries of about 1.65 million vehicles, marking the company’s second consecutive annual decline.

Analysts have said Tesla came under immense pressure in 2025 in North America and Europe, where competition intensified and the company faced brand backlash due to CEO Elon Musk’s political rhetoric.

Growing competition from Chinese firms and European automakers such as Volkswagen and BMW has weighed on Tesla’s sales momentum.

BYD said sales outside of China climbed to a record 1 million vehicles in 2025, up about 150% from 2024. The company has said it aimed to sell as many as 1.6 million vehicles outside China in 2026, though it has not disclosed an overall sales target.

Tesla in October launched stripped-down “Standard” versions of the Model Y and Model 3, priced about $5,000 below the previous base models, as it sought to defend sales volumes after the tax credit loss and appeal to customers in Europe looking for cheaper options.

The move disappointed some investors, who had expected a larger price cut or a meaningfully new mass-market product.

Even as vehicle deliveries have weakened, Tesla shares rose about 11.4% in 2025, boosting Musk’s wealth.