With a key government subsidy gone, Tesla is using a rental model as a 'try-before-you-buy' tactic. This shift indicates EV companies must now rely on creative sales funnels and direct product experience, rather than financial incentives, to convert hesitant customers.

While government support helps, China's rapid adoption of Level 2+ smart driving is primarily driven by fierce domestic EV competition. In a crowded market where over half of new car sales are electric, automakers use advanced autonomous features as the most effective means to differentiate and attract consumers.

China's economic structure, which funnels state-backed capital into sectors like EVs, inherently creates overinvestment and excess capacity. This distorted cost of capital leads to hyper-competitive industries, making it difficult for even successful companies to generate predictable, growing returns for shareholders.

The expired IRA tax credit had strict "Made in America" rules for purchased EVs, but these rules didn't apply to leased vehicles. This loophole allowed consumers to get the subsidy benefit on German-made luxury EVs and others that would not have otherwise qualified.

Despite devising a clever, IRS-approved leasing scheme to extend EV credits, both companies immediately abandoned the plan after a few senators threatened an investigation. This rapid reversal highlights the auto industry's extreme sensitivity to political pressure, even when legally in the clear.

The administration killed a tax credit that directly spurred billions in investment for new EV and battery factories, primarily in Republican-led states. This move is described as "the most anti-manufacturing thing that you possibly could do."

The credit's requirements for North American manufacturing and sourcing from trade partners were designed to counter China's dominance in the EV supply chain. Its elimination undermines this strategic goal, leaving tariffs as the primary, less effective tool.

The belief that consumers needed electric versions of familiar gas-guzzling trucks and SUVs led to EVs that were too big, heavy, and expensive. The market is now forcing a pullback from this strategy towards smaller, more efficient, and profitable designs.

The political challenge of climate action has fundamentally changed. Renewables like solar and wind are no longer expensive sacrifices but the cheapest energy sources available. This aligns short-term economic incentives with long-term environmental goals, making the transition politically and financially viable.