President Donald Trump and billionaire Elon Musk’s alliance ended dramatically this week as the two publicly feuded on social media over Republican lawmakers’ One Big Beautiful Bill Act, which would advance the president’s agenda. 

The legislation, which passed in the House in late May, would cut several green initiatives and tax incentives set under the Biden administration that have benefited Musk and his businesses, especially Tesla.

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Musk shocked Republicans on Tuesday when he lambasted the bill as “outrageous” and a “disgusting abomination.” He later called on the Senate to kill the proposal. 

Trump, who gave Musk unprecedented access to his Cabinet and the Oval Office during the first 100 days of his administration, told the press on Thursday that he was “very disappointed” by Musk’s remarks. The president said Musk previously had no problems with the legislation, and accused him of only opposing it once he learned that it would “cut the EV mandate.”

Electric vehicles are expected to take a hit under the existing reconciliation budget proposal, but that isn’t the only provision that would seemingly hurt Musk and his business if passed as written. 

Solar subsidies and investments

The House-passed reconciliation bill currently includes a provision to repeal the 2022 Inflation Reduction Act’s residential solar credit.

This subsidy, also known as the residential clean energy credit, is equal to 30% of the costs of new, qualified clean energy property installed on residential homes between 2022 and 2032.

The Congressional Budget Office has estimated that eliminating the credit will generate over $77 billion between 2025 and 2034. 

Musk and Tesla have advocated rooftop solar subsidies for years, particularly as the EV company merged with leading solar panel manufacturer SolarCity in 2016. Since the acquisition, Tesla’s energy division has quietly grown, selling various solar and battery storage projects while benefiting from federal subsidies. 

Tesla Energy was the fastest-growing part of the company last year and saw its revenue increase by 67% year over year in 2024. 

Last week, Tesla Energy called on the Senate to protect residential solar and other tech-neutral clean energy credits. While the company did not detail how its revenues could be affected without the tax credit, Tesla did say abruptly ending them would “threaten America’s energy independence and the reliability of our grid.” 

“We urge the Senate to enact legislation with a sensible wind down of 25D and 48e. This will ensure continued speedy deployment of over 60 GW capacity per year to support AI and domestic manufacturing growth,” the company said in a post on X.

Emissions rule rollback

The House bill would also repeal stringent emission standards set by the Biden administration to accelerate the transition toward EVs. The House version of the legislation would repeal several Inflation Reduction Act programs designed to reduce vehicle emissions. 

The bill would also repeal Biden’s fuel economy standards, also known as CAFE standards, which require automakers to use a range of technologies to comply, including producing EVs. It would also slash the Environmental Protection Agency’s multipollutant standards for light-duty and medium-duty vehicles, which require automakers to meet emissions standards.

Tesla has benefited from the programs, as it receives regulatory credits that can be traded or sold to other automakers who need to meet the standards. Auto manufacturers receive credits by exceeding CAFE standards and, in some states, emissions standards. Tesla previously urged the Biden administration to set even more stringent fuel efficiency standards than the ones ultimately finalized.

Regulatory credits have been one of Tesla’s biggest sources of profits, Seth Goldstein, an equity strategist at Morningstar, said earlier this year. 

“When Tesla’s underlying business was still unprofitable, it often used the credits as a way to bridge the gap to profitability,” Goldstein said.

EV tax credits

In addition, the bill would also repeal a slew of clean vehicle tax credits that incentivize consumers and businesses to purchase EVs and plug-in vehicles. 

It would cut previously owned clean vehicle credits, clean vehicle credits, qualified commercial vehicle credit, alternative fuel vehicle refueling property credit, and the transferability of clean fuel production credits. 

The CBO estimated that the termination of these EV-related tax credits would generate around $191.7 billion in revenue between 2025 and 2034.

Musk has advocated ending the tax credits for EVs and other sectors. Although the credits for EVs directly help Tesla, they provide a bigger advantage to competitors that are further from profitability.

Overall, Tesla has spent roughly $240,000 lobbying members of Congress on policies related to EVs, according to OpenSecrets.

While the One Big Beautiful Bill Act passed in the House, the final bill’s text is anticipated to change as a number of key senators have expressed interest in saving various clean energy tax credits.

However, the Senate is expected to still deal a blow to the EV industry, as draft text released by the Environment and Public Works Committee this week includes a provision rescinding regulations on vehicle tailpipe emissions.