Tesla stock was falling early Tuesday after thawing U.S.-Chinese trade relations gave shares a big boost on Monday.
Now, the focus shifts back to the U.S. and President Donald Trump’s tax policy.
Shares of the electric-vehicle maker were down 1.1% in premarket trading at $314.99, while S&P 500 and Dow Jones Industrial Average futures were 0.4% and 0.2% lower, respectively.
Tesla shares rose 6.7% to start the week, closing at $318.38, giving the auto maker a market capitalization north of $1 trillion. Trade news drove Tesla stock up. Chinese and U.S. officials announced a 90-day pause on steep import tariffs Monday following talks in Switzerland over the weekend. Tariffs on Chinese and U.S. imports were north of 100% before the pause. Levies that high are essentially a trade embargo.
Tesla stock rose despite Chinese EV sales dropping almost 9% year over year in April. Falling sales is one reason Tesla investors are happy with better trade relations. Cantor Fitzgerald analyst Andres Sheppard noted that Chinese consumers have avoided American products as the U.S.-China trade war escalated.
With trade tensions easing, investors can turn their attention back to the U.S. On Monday evening, The House Ways and Means Committee published a markup of a bill intended to be part of President Trump’s “One Big Beautiful Bill” intended to cut tax rates, among other things.
That markup would see EV purchase tax credits eliminated by the end of 2025. That’s bad for EV buyers, who qualify for up to a $7,500 tax deduction. The markup, however, also included a provision to deduct auto loan interest from taxable income as long as the car is manufactured in America.
Tesla makes all the cars it sells in the U.S. domestically.
For overall EV affordability, losing the EV credit is worse than getting tax-deductibility of auto loan interest, but both things were widely expected.
Write to Al Root at allen.root@dowjones.com
