Rivian plans to introduce its affordable R2 model around $45,000, along with other models, aiming to perform better in a market without tax incentives, as the industry anticipates a potential sales slump.

Tesla's stock surged recently due to CEO Elon Musk’s optimism and hype, but the company's fundamental sales and revenue have declined, and it is losing revenue from the removal of government support like CAFE credits.

The expiration of U.S. federal tax credits for electric vehicles at the end of September 2025 is expected to cause a significant decline in EV sales, with research estimating reductions between 16% and 38%.

This tax credit, which previously could reduce the purchase price by up to $7,500, played a crucial role in making EVs more affordable and boosting demand, impacting companies like Tesla and other EV manufacturers.

Following the end of the $7,500 EV tax credit, Tesla and other automakers face challenges, with Tesla's Q3 2023 revenue expected to be flat and its automotive revenue falling 16% in the second quarter.

Despite short-term hurdles, long-term EV adoption remains promising, with Tesla positioned to withstand the downturn due to its access to capital and ongoing investments in new, more affordable models like the $30,000 EV.

Lucid faces significant difficulties, with delays in launching affordable models beyond 2026 and financial constraints that could hinder its competitiveness in a cost-conscious market.

Tesla is also losing revenue from the removal of CAFE credits, which contributed billions in 2024, further impacting profit margins.

Elon Musk has shifted from suggesting Tesla would benefit from the credit removal to criticizing the law, which he now sees as favoring oil and gas industries over EVs.

Experts warn that EV sales are expected to decline sharply in 2026, with demand potentially being 'dreadful,' as regulatory and market changes take effect.

Historical data from countries like Germany and Canada show that demand for EVs drops significantly after subsidies end, with consumers rushing to buy beforehand, leading to a lull afterward.

Investors are advised to consider reallocating assets toward companies better positioned for the new market conditions, rather than abandoning EV stocks entirely, with a focus on long-term EV adoption.