Connect with us

Published

1 year ago

on

What makes a Lotus, a Lotus? Anyone familiar with automotive history would likely say it’s the coy “simplify, then add lightness” philosophy that defined Colin Chapman’s scrappy sports car manufacturer and UK Formula One legend. But last year, the company began shipping its all-new electric SUV, the Eletre. It weighs 2600 kilograms. It’s built in China. It has more settings than a high-end washing machine. It’s… an SUV. Absolutely nothing about this car says “Lotus” — aside from the many Lotus logos on it.

Yesterday, I sat down with two of Lotus’ leaders, Chief Commercial Officer Mike Johnstone and VP of Design Ben Payne. Their story is one of a historically agile company doing what it’s always done: Breaking rules and bucking expectations. Now, I draw the line at building a super luxury SUV being “rebellious” (which Lotus claims the Eletre is, given the aforementioned heritage) — that’s like calling a Rolex a counterculture statement. Taking a step back from a blatant case of chasing the market with the Eletre, the strategy of the “new” Lotus does break sharply from the expectations anyone who knows the company would have had even five years ago. The end goal? Securing Lotus’ financial future so it can build an EV sports car that’s actually fun and engaging to drive. That’s easier said than done, but it’s a real plan. 

Evolve or die

In a future where many boutique sports cars are likely to be as culturally relevant as grandfather clocks and polo horses, stubbornly adhering to analogy idolatry and internal combustion romanticism is a “business strategy” like smoking five packs a day is a “retirement plan.” Many sports car enthusiasts believe that the gas sports car will hold on for decades, a niche market offering for those of us who demand a mechanical connection to our vehicles. I don’t know that Lotus would go so far as I would, but I consider this viewpoint borderline delusional. It betrays a fundamental ignorance of supply chains, product development cycles, and product-market fit. The demand for new ICE sports cars is headed for a cliff. I predict we won’t see new platforms of this type after 2030, perhaps barring bespoke hypercars and specialty track-only toys — I’m ready to sign the category’s death warrant now (signed: previous owner of two Mazda Miatas, a Veloster N, a VW GTI, and a Mercedes SL55 AMG). 

The Emeya is Lotus’ forthcoming super-GT sedan. It shares a platform with the Eletre SUV.

As the concurrent cascades of supplier, R&D, advertising, and market demographic shifts to the EV come tumbling down on the industry like a lithium-ion Niagra, you’d have to be clinically unhinged to pour billions of dollars into a new ICE sports car platform intended to be on sale past the early 2030s. I suspect most sports car makers know this, but few are ready to say it out loud for fear of alienating their very emotionally invested (and very profitable) customers. Lotus understands that we’re headed for a historic market disruption event, one which has no precedent. The brand plans to be fully electric by the end of 2027, meaning the current Emira will be Lotus’ last gas engine product, full stop. The Emira is easily the best-reviewed and most in-demand car the company has ever built. And it’s still declaring ICE dead. 

When talking to Ben and Mike, I heard two themes consistently: Lotus needs to quickly expand its portfolio if it’s going to make a credible EV sports car, and the new killer feature of that sports car experience will be software. Hearing this would make the hairs stand up on the necks of many Evora or Emira owners, even if Lotus says it wants to respect the brand’s faithful community as it enters this new era. Frankly, I get the sense that while Lotus may respect that community, it is refusing to be defined by it, and is moving full steam ahead at a deeply opportune moment — to dramatically and pivotally transform the business.

In many ways, Lotus’s playbook is incredibly familiar. Lotus won’t even announce its EV sports car, internally dubbed the Type 135, until 2025, and sales won’t start until 2027. In the meantime, it will build a portfolio of three much more mainstream vehicles — the now on-sale Eletre, the GT super-sedan Emeya (on sale this year), and the unannounced Type 134 crossover (think Macan EV competitor).

The Emeya’s luxurious interior is as pleasant as it is surprising from a brand like Lotus.

The Eletre represents what will likely be the most profitable category of vehicle to build on a per-unit basis for any OEM right now: a big luxury SUV. They’re popular globally, and high-earning buyers are likelier to pick them over a traditional sedan layout. While I think the luxubarge SUV segment is headed for a decline in the mid-term, there’s likely room for new players to get established here — especially if the execution of the product is strong. I haven’t driven an Eletre, but after spending a good amount of time playing with the in-vehicle software, I’m impressed. It feels far closer to a modern smartphone or tablet than any legacy OEM vehicle, and the performance of the software in the Eletre is excellent. I can also confirm what many reviews have stated: The interior of the Eletre is exceptional. Forget everything you know about Lotus or Chinese EVs — this looks and feels like a $100,000 product. Before I sat in it, I was skeptical of the praise. I’m not anymore. Even the secondary touchscreen in the back feels well-executed. With rear seat heating, ventilation, massage, and media controls, it’s an experience that feels like something out of a Maybach limo. I’m not exaggerating when I say this is a bafflingly lovely car. Not just for a Lotus, but in general.

Software will eat the world, and the sports car

One thing I found in the Eletre that made me legitimately excited? A detailed software changelog. Every notable change or fix introduced as part of the v1.3 OTA update the Eletre received was described in a way that felt straight out of a modern smartphone. This is pretty standard fare for owners of brands like Tesla, Lucid, and Rivian — but most carmakers remain woefully opaque in this regard. Better yet? There were actual changes. The most recent update added a driver entry mode function that automatically adjusts the seat for more room when you climb in, automatic memory for the tilt position of the camera mirrors when the car is placed in reverse, and more. That is to say, Lotus is making the car better with updates. Again, this isn’t revolutionary if you’ve ever owned a Tesla. But for a traditionally low-volume sports car maker? This is cutting-edge stuff.

Beauty is more than seat setting-deep, however. While highly readable menus and logically laid out software navigation are great, they have little bearing on a sports car. Or do they? Speaking with Ben and Mike, this modern approach to software is part of a radical rethink of how Lotus develops the vehicle experience, as an ongoing effort to enhance and refine the product for the customer. Some people may cynically claim this is just a way to “beta test” on customers, but I don’t count myself in this camp. I would much rather buy a new product that can be evolved and iterated based on customer feedback than one that feels frozen in time. Tesla has built a huge part of its brand reputation on this reaction-and-response software agility, and for a good reason — cars should get better with time if they can.

The Evija is a handmade EV hypercar that makes nearly 2000 horsepower. Lotus will begin delivering them later this year. Only 130 will be built.

Claim as commenters on the internet may that their E36 BMW M3 or 997 Porsche 911 was designed perfectly from the factory and never “needed” to be improved, that sentiment derives from well-meaning but ultimately unhelpful nostalgia. Statistically, no buyer of any new mass-produced car wants an “old car” experience — sports car or not. This is like demanding an IBM PC XT in 2024. Is there a “market” for such a thing? Sure, if you want to produce in handmade quantities and demand handmade prices. But no serious car business can be built on the back of such a boutique market, apart from those that cater to the ultra-rich, like Pagani, ICON, or Singer. If you intend to sell thousands of cars a year, let alone tens of thousands, you must build a product that retains a semblance of economic accessibility and practical appeal. I believe such a balance requires electrification and a commitment to a software-defined vehicle — and so does Lotus. 

But even if I accept the actuary-driven reality of running a car business, I’m not totally ignorant of physics. I’ve owned two Mazda Miatas, a car that weighs just a hair over 1000 kilograms. Cars that put a smile on your face just going to the grocery store! To recreate that feeling in something that weighs 1500 kilograms — remember, that’s 50% heavier! — already feels impossible. And there are fewer and fewer ICE sports cars on sale today under 1.5 Miata Standard Units. For example, a new Porsche 911 S comes in slightly over that 1500 kg mark. Now imagine dumping the ICE powertrain and stuffing it full of batteries. Keeping it under 1750 kg would be a big challenge on its own. Historically, lightness is next to godliness for a company like Lotus. I sincerely hope they show the world that lightweighting an EV isn’t just a sneering euphemism tossed around by engineers at the bar. I mean, the first Tesla Roadster weighed about 1250 kg — and that was based on a Lotus! It’s possible, it’s just a question of whether it’s possible while also building something that buyers will actually put down cold, hard cash to purchase. And that’s where software enters the picture.

To Lotus, the Eletre and Emeya — and the forthcoming Type 134 crossover — are where the company will cut its teeth using software to create a more engaging, more fun driver experience. As someone who’s driven a few EVs, “fun” is not how I’d describe the driving experience of any of them. Occasionally amusing? Sure. Calming? Absolutely. Precise? Sure! Gut-wrenching (in the case of high-power EVs)? Unquestionably. But fun? Pardon my Clarksonian wistfulness, but there’s simply no drama to driving an electric car. Lotus wants to change that (as I’m sure do Porsche, Maserati, Lamborghini, and many other brands with plans to electrify sports cars).

Words are well and good, but right now, the evidence on the ground for this approach is… thin. The Eletre offers one concrete example of how Lotus wants to use software to “analogize” the EV driving experience: Throttle input progressively builds power instead of applying the “instant torque” curve we’re all so familiar with when piloting an EV. Interestingly, that throttle is something I’ve seen cited consistently as “weird” (maybe even undesirable) in reviews of the Eletre. I’d put that down to expectations of how an EV “should” deliver power versus it being an objectively good or bad thing, personally — as more companies try more approaches, our expectations will probably adjust to meet some of them. I’ve also yet to drive it myself, so I may well eat my words here; I recognize that. 

But I pick up get what Lotus is putting down here, and speaking to Ben and Mike, the possibilities of the software-led sports car come into vague relief in some exciting ways. Granted, “vague” and “possibilities” are operative words here. It’s easy to be optimistic about the future when you can also be largely noncommittal about it. But walk with me for a moment. Imagine using ADAS systems (radar, cameras, AI) to create driving modes that allow a sports car to drive well beyond a driver’s skill level. Lotus offered no specific examples, but given how Lotus owners tend to use their cars? My mind immediately goes to Lotus-developed AI track mappings that keep the car on the best line and even auto-brake as you enter the braking zone coming into a corner. Yes, like a video game. While the idea of a novice turning Randy Pobst times around Laguna Seca by tapping a touchscreen and mashing the right pedal would make any track rat’s blood pressure spike, I can already tell you: That would sell a sports car. Because that can give a driver an experience that only software can (absent years of rigorous practice and professional coaching).

Lotus’ infotainment interface already looks like a video game loading screen. Video game car settings seem a logical next step.

On the road, the possibilities for software to inject fun into the EV driving experience are a bit different. Some ICE OEMs have already played with modes that allow a car to lose enough traction to give a thrill around a corner still while remaining safe and controllable (a “drift mode,” if you will). Something similar for EVs sounds feasible. I’d love to see “heritage” driving modes, where adaptive air suspension, electric anti-roll, and drive-by-wire steering can recreate the input (steering and throttle) responses, ride quality, and perceived grip levels of reference cars. Imagine being able to put your car in “Lotus Esprit Twin Turbo” mode — with absurd intake noises coming through the rear speakers and all. Me likey. But that feels far more ambitious than teaching a car how to go around a track quickly or give a little extra wheelspin around a hairpin corner. More Sports Car 2037 than Sports Car 2027.

Lotus 2027

In 2027, Lotus intends to begin manufacturing and selling this Type 135 2-seater sports car, the first all-electric sports car in its history. I already suspect there’s a good chance this car could be pushed back if market conditions or technical advancements don’t line up precisely — Lotus was transparent that this is still a vehicle they’re in the process of defining. Given how green a field this segment is for any OEM (no EV sports cars meaningfully exist, after all), it will be essential to deliver a strong first showing. Lotus says that the Type 135 will be the “halo” vehicle for its brand, and that means it needs to be different enough, desirable enough, and critically lauded enough to move units for the rest of the portfolio (read: It needs to sell those profitable SUVs). That’s a tall order, and I remain unsure if Lotus will be ready to fill it by 2027. But that’s the plan, so I fully accept I may be wrong here. Lotus is the one building cars, after all, not me.

Eletre business today, sports car fun tomorrow.

With Geely’s engineering, financial, and manufacturing resources (the Geely factory Lotus has contracted in Wuhan can scale to 150,000 cars per year), it’s Lotus’ game to lose. While Porsche will likely start selling its EV Boxster and Cayman replacement before Lotus gets to market, the EV sports car space seems destined for a much more gradual ramp-up than the SUV/CUV and other mass market segments. Given the volumes these cars sell in, that’s not a particularly bold prediction — I suspect many OEMs will take a “wait and see” approach to the EV sports car before deciding if it makes sense to jump in. But that leaves an open door to build a brand, assuming the customers show up.

Many car enthusiasts believe that electrification will be the death of the sports car. That’s a bit melodramatic. But the sports car is about to enter the most challenging environment it has ever faced, and it won’t come out the other end as the sports car we know today. It’s going to be something different. As a car enthusiast, I’m heartened that companies like Lotus are trying to shepherd the sports car through this next stage of life — and still cognizant that there’s a real chance of failure. But I retain hope that someone will get it right, and Lotus is a name that’s earned its reputation for pluckiness. The Type 135 will see that reputation put fully to the test.

FTC: We use income earning auto affiliate links. More.

Related Topics:
Continue Reading

Environment

ECOVACS Goat RTK robot mowers start from $850 low, Rad Power RadWagon 4 cargo e-bike $1,499, EcoFlow solar bundle flash sale, more

Published

2 hours ago

on

July 30, 2025

By

ECOVACS Goat RTK robot mowers start from 0 low, Rad Power RadWagon 4 cargo e-bike ,499, EcoFlow solar bundle flash sale, more

This week’s hump day Green Deals start off with the ECOVACS Goat O1000 RTK Robot Lawn Mower returning to its $850 low for the third time ever, while its upgraded A2500 model is down at its second-lowest price too. From there, we have a spotlight on Rad Power’s popular RadWagon 4 Cargo e-bike at $1,499 while the brand’s Back to School Sale continues through to next week, as well as EcoFlow’s final 24-hour July Monthly Madness flash sale that is taking up to 55% off DELTA 2 Max and DELTA 3 Pro solar generator bundles starting from $1,349, while also offering an increased EcoCredits purchase option. We also have a returning low on the 80V Pro-grade Greenworks 18-inch chainsaw, a one-day-only discount on Anker’s SOLIX C300X DC power station with a book-sized 60W folding panel, and more waiting for you below. Plus, all the hangover savings at the bottom of the page, like yesterday’s Navee ST3 Pro electric scooter savings, Aiper’s HydroComm pool monitor hitting its lowest price for the second time, and more.

Head below for other New Green Deals we’ve found today and, of course, Electrek’s best EV buying and leasing deals. Also, check out the new Electrek Tesla Shop for the best deals on Tesla accessories.

Save up to 35% on ECOVACS’ Goat RTK robot lawn mowers with fisheye cameras starting from an $850 low

Amazon is offering the ECOVACS Goat O1000 RTK Robot Lawn Mower for $849.99 shipped, which beats out the brand’s direct website pricing by $50. This newer lawn care solution has only been on the market for five months and normally goes for $1,000 at full price, with discounts having mostly taken the price down to $900, aside from the two recent falls to the $850 low in May and June, while getting skipped over during Prime Day sales. This is the third time that we’ve seen this all-time low price appear with $150 cut from the tag price, and you’ll also find its upgraded counterpart benefitting from a discount below.

The ECOVACS Goat O1000 robot mower is the base model of the series designed to handle up to 1/4 of an acre of land on each full charge, with it able to stop, charge, and return to its duties for larger yards. Forget having to deal with laying boundary wires here, as it’s been given RTK navigation that provides more accurate location tracking on top of efficient route planning, with bolstered support from the LiDAR (3D-ToF) and fisheye camera that can take over steering when it enters heavily shaded or tree-lined areas that the satellites can’t see into. There’s also AIVI 3D obstacle avoidance tech, with the added bonus that it can also identify small animals alongside everyday inanimate objects around your yard – whether in the sun or in the dark.

Advertisement – scroll for more content

ECOVACS’ Goat robot mowers can fit into tighter spaces between fences and the like that a normal mower may struggle or fail to tackle well, thanks to the compact and narrow design of its body, with it even given an IPX6 waterproof construction should it need to tough out sudden weather changes as it works. There’s plenty of remote smart controls available via its companion app, giving you the means to adjust settings, monitor its real-time performance, and edit the 3D maps it creates.

There’s also the more advanced ECOVACS Goat A2500 RTK Robot Lawn Mower down at its second-lowest price of $1,299.99 shipped right now, down from its $2,000 price tag. This model comes with a 32V motor and dual-blade discs, with a 5Ah battery that allows it to cover up to 5,382 square feet of mowing on a single charge, which it can be ready to pick back up on after only 45 minutes of charging at its station. It brings much of the same smart capabilities for its navigation and obstacle avoidance as the above model, with the added bonus of responding to voice commands via Alexa or Google Assistant too.

woman riding Rad Power RadWagon 4 cargo e-bike with two children

As part of its ongoing Back to School Sale running through August 6, Rad Power Bikes is offering its RadWagon 4 Cargo e-bike at $1,499 shipped, alongside the ongoing low RadExpand 5 pricing and the new RadRunner e-bike bundles. This popular model fetches $1,799 at full price, which we’ve only seen dropped down to $1,599 over the last year, with more frequent returns to $1,499 in 2025 or otherwise given some bundled accessory packages. This is the lowest price we have tracked in the last two years, beaten out by the $1,399 post-launch low from 2023 and the all-time $1,299 preorder low from its launch years before.

If you want to learn more about this model, be sure to check out our original coverage of this e-bike here, while you can also browse the entire Rad Power Back to School Sale lineup here.

man aiming solar panel towards sun on leafy ground while plugged into EcoFlow DELTA 2 max portable power station

EcoFlow’s final July Monthly Madness flash sale takes up to 55% off DELTA 2 Max and DELTA Pro 3 bundles starting from $1,349

As part of the final days of its July Monthly Madness Sale running through July 31, EcoFlow has launched the last of this sale’s scheduled 24-hour flash sales through tomorrow at 9 a.m. PDT / 12 p.m. EST with up to 55% discounts on two solar generator bundles and an increased EcoCredits one-time purchase promotion. The most budget-friendly of the two bundles gives you the DELTA 2 Max Portable Power Station with a 400W solar panel at $1,349 shipped, and that price matches at Amazon too. This bundle would normally cost you $2,298 at full price, with discounts having mostly kept costs between $1,399 and $1,599 over the year, though we have seen it go as low as $1,279 during Prime Day. You’re looking at a 55% markdown here for the next 24 hours that saves you $949 at the third-lowest price we have tracked. Head below to learn more about this unit and the other offers during this sale.

If you want to learn more about this power station or the other offers during this 24-hour flash sale, be sure to check out our original coverage of these deals here.

man cutting log with Greenworks 80V 18-inch cordless chainsaw

Cover storm cleanup, firewood, more with Greenworks’ Pro 80V 18-inch cordless chainsaw at $199 low

Amazon is offering the Greenworks Pro 80V 18-inch Brushless Cordless Chainsaw with 2.0Ah battery at $199 shipped, while it’s priced at $229 directly from the brand’s website. It carries a $350 MSRP direct from Greenworks, but we have been seeing it more often at $299 at Amazon, with discounts mostly keeping things at $229 on average, with two previous falls to the $199 low, most recently during Prime Day three weeks ago. You’re looking at the best price we have tracked on this pro-grade model, giving you significant power for sawing needs with $100 cut from the tag (and $151 off the MSRP).

If you want to learn more about this pro-tier tool, be sure to check out our original coverage of this deal here.

man and woman camping during the day and night with Anker's SOLIX C300X portable power station solar bundle

Carry Anker’s SOLIX C300X DC power station with a book-sized 60W folding solar panel at $237 (Today only)

As part of its Deals of the Day, Best Buy is now offering the Anker SOLIX C300X DC Portable Power Station bundled with a 60W foldable solar panel for $236.99 shipped. While this model starts for $330 at full price here, it carries a lower $300 tag directly from the brand’s website, where it’s currently sitting untouched by discounts, while Amazon’s matching grey colorway is priced $23 higher. For most of 2025, while there have been price cuts, they generally hit $250, though it did drop a tad lower to $230 during Prime Day, as well as $220 in February, with everything beaten out by the $190 Black Friday low. For the rest of the day, you can pick up this solar generator bundle with $63 off the going rate ($93 off the Best Buy tag) at the third-lowest price of the year and fourth-best overall.

If you want to learn more about this compact solar generator bundle, be sure to check out our coverage of this one-day-only deal here.

Best Summer EV deals!

Best new Green Deals landing this week

The savings this week are also continuing to a collection of other markdowns. To the same tune as the offers above, these all help you take a more energy-conscious approach to your routine. Winter means you can lock in even better off-season price cuts on electric tools for the lawn while saving on EVs and tons of other gear.

FTC: We use income earning auto affiliate links. More.

Continue Reading

Environment

Ford says it will build ‘breakthrough’ EVs in the US

Published

3 hours ago

on

July 30, 2025

By

Ford says it will build 'breakthrough' EVs in the US

Ford-Q2-2025-earnings

Ford (F) reported Q2 2025 earnings on Wednesday, beating top and bottom line expectations. Despite the revenue growth, Ford is warning profits will take a hit thanks to Trump’s tariffs. We will also learn about Ford’s plans to build “breakthrough” EVs in the US very soon.

Ford Q2 2025 earnings preview

After suspending full-year guidance in May, Ford warned that it expected to take a $2.5 billion hit from Trump’s auto tariffs.

Given that Ford builds more vehicles in the US than any major automaker, outside of Tesla, it’s expected to see less of an impact from the 25% tariff on imports.

Ford imports just about 21% of the vehicles it sells in the US. In comparison, crosstown rival GM imports around 46%. GM announced last week that the tariffs cost it an extra $1.1 billion in the second quarter. For the full year, GM still expects a $4 billion to $5 billion impact.

Advertisement – scroll for more content

Unlike GM, Ford breaks down earnings into three units, including Model e, its electric vehicle business. Ford’s Model e posted a nearly $1 billion loss in the first quarter, but new EVs rolling out in Europe boosted revenue.

Although Ford’s vehicle sales rose 14% to over 612,000 in Q2, EV sales dropped 31% to just 16,438. Ford spokesperson Martin Gunsberg told Electrek that both the Mustang Mach-E and F-150 Lightning were impacted by the changeover to the 2025 model year and the Mach-E recall.

Ford-Q2-2025-earnings
Ford Mustang Mach-E (left) and F-150 Lightning (right) (Source: Ford)

According to Estimize, Wall Street expects Ford to post second-quarter EPS of $0.33 on revenue of $43.75 billion.

Improving costs and more EV news to come

Ford beat earnings estimates posting second quarter revenue a record $50.02 billion in revenue, up 5% YOY and an adjusted EPS of $0.37.

  • Ford Q2 2025 Revenue: $50.02 billion vs $43.75 billion expected
  • Ford Q2 2025 adjusted EPS: $0.37 vs $0.33 expected

Despite the higher revenue, Ford posted a $36 million net loss, which was due to a “field service action and expenses related to a previously announced cancellation of an electric vehicle program.” It also incurred an $800 million loss due to tariffs in the quarter.

Ford Pro continues to drive both top and bottom-line growth with high-margin revenue streams from software and services.

Its Model e EV business, on the other hand, lost another $1.3 billion in the second quarter. Through the first half of the year, Model e has now lost $2.2 billion.

Ford-Q2-2025-Earnings
Ford Model e Q2 2025 earnings (Source: Ford)

Ford attributed the higher losses to tariff-related costs and investments in launching its new EV battery plant in Michigan.

After launching new EVs in Europe, like the Capri and electric Explorer, Model e’s revenue doubled to $2.4 billion. Mustang Mach-E and F-150 Lightning material costs also improved in the quarter.

Ford-EVs-Europe
Ford’s electric vehicles in Europe from left to right: Puma Gen-E, Explorer, Capri, and Mustang Mach-E (Source: Ford)

Ford now expects full-year adjusted EBIT of $6.5 billion to $7.5 billion, including a $2 billion hit from tariffs. That’s down from the $7 billion to $8.5 billion it previously forecasted.

The company will partially offset a $3 billion gross adjusted EBIT impact, partially offset by $1 billion in recovery actions.

CEO Jim Farley announced an event on August 11 in Kentucky, where Ford will share more details about its “plans to design and build breakthrough electric vehicles in America.”

Check back for more info from Ford’s Q2 2025 earnings call. We will keep you updated with the latest.

FTC: We use income earning auto affiliate links. More.

Continue Reading

Environment

Tesla is about to lose the $7,500 EV tax credit – again – and this time the cliff is a lot steeper

Published

3 hours ago

on

July 30, 2025

By

Tesla is about to lose the ,500 EV tax credit – again – and this time the cliff is a lot steeper

Tesla family hero

Tesla is about to tumble off a familiar policy cliff. The $7,500 federal tax credit that juiced demand for electric vehicles in the US, Tesla’s last large, healthy market, after September 30, 2025. Tesla has been here before, but the ground underneath the company looks very different today.

Let’s dig into what happened last time, what’s changing now, and why Elon Musk is already warning shareholders of “tough quarters ahead.”

We have been here before. Tesla lost access to parts of the federal tax credit for electric vehicles in 2019 and lost it fully by 2020.

Flashback: the 2019 credit phase‑out was painful—but survivable

  • Trigger: Tesla crossed 200,000 cumulative US deliveries in July 2018, starting a timer that halved the credit to $3,750 on Jan 1, 2019, and again to $1,875 on Jul 1, 2019, before it went to zero on Jan 1, 2020.
  • Tesla’s playbook: On Jan 2, 2019 the company shaved $2,000 off the sticker of every Model S, X, and 3 to “partially absorb” the lost incentive.
  • Demand whiplash: The price cut wasn’t enough to avoid a huge pull‑forward. Deliveries spiked in Q4 2018, then fell 31 % QoQ in Q1 2019.
  • Fast recovery: Thanks to Model Y’s arrival and virtually zero credible EV competitors, Tesla ended 2019 with 367,500 global deliveries (‑US dip only 1 %) and roared back to 499,550 in 2020.

Last time, the phase-out was gradual, enabling Tesla to fill the hole with price cuts.

Advertisement – scroll for more content

Most importantly, the phase-out period coincided with the launch of Model Y, which never had full access to the federal tax credit, allowing Tesla to grow in the US without it.

The 2025 sunset hits everyone, but it hurts Tesla most

The situation in 2025 is vastly different. Firstly, the EV market has undergone significant changes in the US. Tesla is still the biggest brand, but it’s nowhere near where it was 5 years ago:

2020 cliff 2025 cliff
Who lost the credit? Only Tesla and GM Every OEM, but Tesla sells the most EVs
Competitive field < 15 mainstream EVs on sale > 60 credit‑eligible models in showrooms
Tesla US share ~75 % of EVs 46 % in Q1 2025 and sliding
Gross margin cushion ~22 % automotive ~17 % in Q1 2025 after a year of price cuts

Furthermore, the impact of the tax credit was greater in the latest version. The Biden administration reinstated Tesla’s access to the $7,500 tax credit for electric vehicles in 2022 through the Inflation Reduction Act (IRA).

However, it became even more attractive in 2024 when the government made it a “point-of-sale” incentive, which was applied directly to the vehicle’s price rather than as a rebate on taxes.

Going from that to nothing is expected to have a greater impact on demand for electric vehicles in the US.

What can Tesla do this time?

As last time, Tesla is expected to cut prices to compensate for the tax credit’s expiration.

However, Tesla has slimmer gross margins than it did previously, and it is not expected to be able to cut prices enough to compensate for the $7,500 price difference.

In addition to cutting prices, Tesla is expected to launch a stripped-down version of the Model Y with fewer features, which should significantly reduce the base price of its most popular model.

It should help with demand and avoid a greater reduction in Tesla’s production line capacity in Fremont and Austin, but with less value than the current versions of the Model Y, it is expected to cannibalize the more expensive versions of the best-selling vehicle mostly.

Key Take‑away 2018‑20 Phase‑out September 30 2025 Sunset (forward‑looking)
Trigger Tesla hit 200 000 cumulative U.S. EV deliveries in July 2018; credit stepped to $0 on 1 Jan 2020. Statutory clean‑vehicle credit (up to $7 500 new / $4 000 used) ends for all manufacturers on 30 Sep 2025 under the IRA sunset clause.
Immediate demand reaction Pull‑forward surges before each step‑down (Q4 2018, Q2 2019) followed by soft Q1 2019 deliveries (‑31 % QoQ). Dealers already advertising “buy before it’s gone,” and analysts expect a Q3 2025 bump.
Volume impact in the first full no‑credit year Tesla U.S. sales dipped only 1 % in 2019 and re‑accelerated +50 % in 2020 despite $0 credit, helped by Model Y launch and limited competition. Competitive landscape is radically different—Tesla’s U.S. EV share has slipped from 62 % in 2022 to 46 % in Q1 2025. Demand is more price‑sensitive.
Profit levers used $2 000–$3 000 price cuts, feature unbundling, and manufacturing scale offset lost credit. To replicate prior success Tesla would need deeper price moves or zero‑interest financing, pressuring gross margin already down ~650 bps YoY by Q1 2025.
Strategic cushion First‑mover advantage; few high‑volume rivals. 60+ eligible models from 17 brands compete in sub‑$60 k bracket; used‑EV market growing; interest‑rate environment still elevated.

Electrek’s Take

Shareholders should brace for the worst here. I know many of them have been holding on to the fact that Tesla did quite well after the removal of the tax credit last time, but as explained above, this time is entirely different.

The US has been Tesla’s only somewhat healthy market amongst the large automotive markets (US, Europe, and China). That’s because it is an uncompetitive market when it comes to electric vehicles.

Foreign EVs are not eligible for the tax credit, and Chinese EVs are subject to a 100% tariff.

The result is that Tesla was able to maintain a 45% (but declining) market share in the US EV market, compared to just 9% in Europe and 4% in China.

Now, demand for electric vehicles in the US is expected to crash.

Tesla CEO Elon Musk knows that he has warned that the automaker might face some “tough quarters” in “Q4 2025, and Q1 and Q2 2026.” After that, he expects Tesla to do well thanks to autonomous driving, but he has been consistently wrong about that for years.

I think the crash in demand will be accentuated in Q4 due to demand being pulled forward in Q3, which is likely to be Tesla’s last good quarter for a long time.

We are about to see Tesla’s sales decline, most likely sharply, in the US, while they have already crashed in Europe and are experiencing a decline in China due to intense competition.

FTC: We use income earning auto affiliate links. More.

Continue Reading

Trending