
Love him or hate him, Elon Musk deserves credit for creating the electric vehicle (EV) market as we know it today. Soon, he may also be responsible for destroying it.
At least the EV market as we know it today, the one Musk’s vision for Tesla helped shape. His move into politics has seen him take on a major role within the US government, which will take a considerable amount of time and attention away from Tesla when the company needs it the most. It also coincides with the new US Federal Government taking a hard turn away from the policies that allowed Tesla, and other car makers, to have such success with EVs in recent years.
Tesla’s global sales were down for the first time in the brand’s history in 2024, and that will not be helped by the new US president cutting the US$7500 tax credit for EVs. Immediately a Tesla costs more than US$200 per month more than it did a few weeks ago. Typically, increasing the cost of a product amid softening demand is not a good business practice, so Tesla will have its work cut out trying to attract buyers in an increasingly busy and competitive market.
That’s bad news for the entire EV car industry, because despite the increasing number of EV models from different brands, Tesla still dominates the market. In Australia its market share has slipped from more than 60 per cent to around 42 per cent in recent years, but that’s still the majority of new EVs sold.
Even putting aside the touchy subject of Musk’s political affiliations and the impact that will have on Tesla, which is a brand intertwined with Musk and his image, the American EV maker is facing more and more competition – and not just from EVs.

Hybrids have become mainstream with modern car buyers, while plug-in hybrids are seen as the short-term (and possibly mid-term) future for dramatic emissions reduction without fully committing to all-electric power. These kinds of technologies are likely to become increasingly common in the Australian market, while in the important US car market the government’s new ‘anti-EV’ policy will likely see a shift back to internal combustion vehicles. We’ve already seen evidence of that this week with news that Ram has dropped plans for an electric version of the 1500 pickup in favour of a new petrol-powered ‘compact’ ute to compete with the Ford Ranger.
Meanwhile in Europe Tesla has been forced to sue the European Union after it implemented tariffs of Chinese-built vehicles, which includes the Model 3 (while the Model Y is made in Germany). Again, even putting political leanings aside for a moment, this situation is somewhat ironic given Musk’s attitude towards tariffs is the complete reverse in the USA and shows how fraught politics can be.
If Musk’s political allies succeed in cutting all support for the EV industry in the USA, it could very much come at Tesla’s expense and leave it facing serious long-term challenges.
Should Tesla decline then it will likely have a major impact on the overall success of EVs, especially if the American industry decides to lean into the new world order and embrace internal combustion again. There is no question developing models using existing petrol engines will be cheaper for manufacturers like General Motors, Ford and Stellantis, but will it be a case of short-term gain for long-term pain, as it will hand the advantage in the EV industry to the government-backed Chinese brands (as we previously wrote here).
Regardless of your political beliefs or preferences for petrol vs electric, the next 12-18 months will have a major impact one what we will be driving over the next decade and beyond – so pay close attention.
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