Tesla’s stock price surged this week even as the cost of getting behind the wheel of one of its vehicles became more expensive. The shift comes at a pivotal moment for the electric vehicle (EV) industry, as a key federal tax credit that helped reduce prices for buyers and lessees has now expired.

Stock Moves Higher

On Wednesday, shares of Tesla rose 3.3% to $459.46, their highest close since December 24, when the stock finished at $462.28. The broader market moved only slightly, with the S&P 500 up 0.3% and the Dow Jones Industrial Average up 0.1%.

The rally reflects growing investor confidence in Tesla as the company heads into its third-quarter delivery report. Wall Street analysts expect Tesla to announce about 457,000 vehicles delivered in the July–September period, a jump from 384,000 in the second quarter, according to FactSet. Many of those sales were likely pulled forward by buyers eager to finalize purchases before the federal EV credit expired.

Tesla shares have been on a strong run, rising 40% during the third quarter. Despite CEO Elon Musk’s warning that “rough quarters” may follow the loss of federal subsidies, investor enthusiasm remains focused on Tesla’s long-term bets on artificial intelligence, including its robo-taxi program launched in Austin, Texas, in June and its development of humanoid robots targeted for mass sales in 2026.

Cars Become More Expensive

While investors are optimistic, Tesla buyers face higher costs. The change stems from the $7,500 federal EV purchase tax credit, which ended on September 30 under a tax and spending bill signed by President Donald Trump.

The elimination of the credit has effectively raised prices across the EV industry. For Tesla, the shift is most visible in leasing costs. The company displays lease pricing directly on its website, and the monthly cost for a leased Model Y now ranges from $529 to $599, up from a previous range of $479 to $529, according to Reuters.

Although Tesla’s sticker prices remain unchanged, the credit had previously flowed through to leasing companies, which own the vehicles during lease terms. With the credit gone, those leasing companies no longer receive the benefit, and the monthly lease rates reflect the difference.

A Temporary Fix From Competitors

Some automakers are attempting to cushion the impact. Ford Motor and General Motors recently announced programs to preserve the $7,500 benefit for customers leasing EVs. Their finance divisions effectively bought vehicles before the September 30 deadline, allowing dealers to extend the savings on current inventory.

But those programs have limits. Once that pre-credit inventory sells out, buyers and lessees of new EVs will no longer have access to the federal benefit, meaning higher effective prices for consumers going forward.

Broader Market Impact

The loss of the federal subsidy highlights the affordability challenge facing EVs. The average transaction price for an electric vehicle in the U.S. is about $57,000, roughly $8,000 more than a typical gasoline-powered car, according to industry data. The $7,500 tax credit helped close that gap and made EVs more competitive in the marketplace.

Without it, automakers may be forced to cut prices to maintain demand, or they may face slower sales growth. For Tesla, which has historically positioned itself as a premium brand, the impact may be less immediate than for companies trying to attract more budget-conscious buyers. Still, industry analysts warn that losing the credit amounts to a meaningful price increase across the sector.

Looking Ahead

Tesla’s upcoming delivery results will provide the first major test of how consumer demand holds up in a post-credit market. Analysts will also watch for any signs that Tesla may adjust pricing strategies or offer new incentives to offset the cost difference for customers.

For now, the company’s stock performance suggests that investors remain focused on Tesla’s ability to innovate beyond cars. With projects in autonomous driving, artificial intelligence, and robotics underway, Wall Street appears to be betting that Tesla can weather near-term challenges while positioning itself as a broader technology leader.

Still, as Musk has cautioned, the next few quarters could bring volatility. Without federal subsidies, EV affordability remains a central question, and Tesla, like its competitors, will need to navigate the transition carefully to sustain both growth and consumer interest.

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