Tech
Tesla’s Solar Empire Faces Crisis as Senate Weighs Killing Key Tax Credits
With billions on the line, Tesla pleads with lawmakers to protect its fastest-growing business from the fallout of IRA rollbacks
Tesla, the electric giant often hailed for its innovative cars, is now in a heated battle to save what could be the most promising wing of its empire — its energy business. While EV sales are cooling, Tesla’s solar and energy division has become a powerful growth engine, pulling in $2.7 billion in revenue in just the first quarter of 2025 — a staggering 67% jump from the previous year. But that momentum now faces a serious political roadblock.
A recently passed bill in the U.S. House, led by Republicans, aims to unravel key parts of the Inflation Reduction Act — most notably the very tax credits that fuel residential solar adoption and large-scale clean energy projects. These tax breaks, currently set to run through 2032, offer 30% returns to homeowners and developers alike. If the Senate echoes the House decision, these incentives could be gone as soon as this year.
That threat has pushed Tesla into lobbying mode, using X (formerly Twitter) to call on the Senate to reconsider. “Abruptly ending the energy tax credits would threaten America’s energy independence and the reliability of our grid,” Tesla Energy stated. The company urged a more measured phase-out strategy, warning that halting these credits could stall the deployment of 60 gigawatts of clean energy capacity annually — vital not only for the energy sector but for fueling the growth of AI and domestic manufacturing.
Elon Musk — who once benefited from billions in government loans and regulatory credits — has stepped back from direct lobbying, but Tesla isn’t leaving this battle to chance. With its EV division under pressure, the company knows its solar wing is its most reliable source of momentum.
The numbers back it up. In 2024, 93% of new energy generation in the U.S. came from clean sources, mostly solar and grid storage. The first quarter of 2025 followed suit with 7.4 GW added — the second-best Q1 ever. By contrast, fossil fuel-based energy like natural gas is increasingly slow to deploy, often facing multiyear delays.
Yet, solar’s success is deeply tied to federal incentives. The threat of repeal has already sent shockwaves through the market. Solar stock giants like Enphase, SunRun, and First Solar have seen their valuations drop 15% to 45% in early 2025.
Tesla is positioning this as more than a company problem — it’s a national one. If the U.S. wants to maintain energy dominance, attract clean-tech jobs, and meet AI-powered infrastructure demands, gutting clean energy incentives could be a disastrous move.
With Senate discussions looming, all eyes are on whether lawmakers will choose short-term politics or long-term sustainability. One thing’s for sure: Tesla is betting big on the latter.