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The Biden administration is hoping they’ll be a starting gun for the industry. The industry may or may not be fully satisfied.
In one of the Biden administration’s final acts to advance decarbonization, and after more than two years of deliberation and heated debate, the Treasury Department issued the final requirements governing eligibility for the clean hydrogen tax credit on Friday.
At up to $3 per kilogram of clean hydrogen produced, this was the most generous subsidy in the 2022 Inflation Reduction Act, and it came with significant risks if the Treasury did not get the rules right. Hydrogen could be an important tool to help decarbonize the economy. But without adequate guardrails, the tax credit could turn it into a shovel that digs the U.S. deeper into a warming hole by paying out billions of dollars to projects that increase emissions rather than reducing them.
In the final guidelines, the Biden administration recognized the severity of this risk. It maintained key safeguards from the rules proposed in 2023, while also making a number of changes, exceptions, and other “flexibilities” — in the preferred parlance of the Treasury Department — that sacrifice rigorous emissions accounting in favor of making the program easier to administer and take advantage of.
For example, it kept a set of requirements for hydrogen made from water and electricity known as the “three pillars.” Broadly, they compel producers to match every hour of their operation with simultaneous clean energy generation, buy this energy from newly built sources, and ensure those sources are in the same general region as the hydrogen plant. Hydrogen production is extremely energy-intensive, and the pillars were designed to ensure that it doesn’t end up causing coal and natural gas plants to run more. But the final rules are less strict than the proposal. For example, the hourly matching requirement doesn’t apply until 2030, and existing nuclear plants count as new zero-emissions energy if they are considered to be at risk of retirement.
Finding a balance between limiting emissions and ensuring that the tax credit unlocks development of this entirely new industry was a monumental challenge. The Treasury Department received more than 30,000 comments on the proposed rule, compared to about 2,000 for the clean electricity tax credit, and just 89 for the electric vehicle tax credit. Senior administration officials told me this may have been the most complicated of all of the provisions in the IRA. In October, the department assured me that the rules would be finished by the end of the year.
Energy experts, environmental groups, and industry are still digesting the rule, and I’ll be looking out for future analyses of the department’s attempt at compromise. But initial reactions have been cautiously optimistic.
On the environmental side, Dan Esposito from the research nonprofit Energy Innovation told me his first impression was that the final rule was “a clear win for the climate” and illustrated “overwhelming, irrefutable evidence” in favor of the three pillars approach, though he did have concerns about a few specific elements that I’ll get to in a moment. Likewise, Conrad Schneider, the U.S. senior director at the Clean Air Task Force, told me that with the exception of a few caveats, “we want to give this final rule a thumbs up.”
Princeton University researcher Jesse Jenkins, a co-host of Heatmap’s Shift Key podcast and a vocal advocate for the three pillars approach, told me by email that, “Overall, Treasury’s final rules represent a reasonable compromise between competing priorities and will provide much-needed certainty and a solid foundation for the growth of a domestic clean hydrogen industry.”
On the industry side, the Fuel Cell and Hydrogen Energy Association put out a somewhat cryptic statement. CEO Frank Wolak applauded the administration for making “significant improvements” but warned that the rules were “still extremely complex” and contain several open-ended parts that will be subject to interpretation by the incoming Trump-Vance administration.
“This issuance of Final Rules closes a long chapter, and now the industry can look forward to conversations with the new Congress and new Administration regarding how federal tax and energy policy can most effectively advance the development of hydrogen in the U.S.,” Wolak said.
Constellation Energy, the country’s biggest supplier of nuclear power, was among the most vocal critics of the proposed rule and had threatened to sue the government if it did not create a pathway for hydrogen plants that are powered by existing nuclear plants to claim the credit. In response to the final rule, CEO and President Joe Dominguez said he was “pleased” that the Treasury changed course on this and that the final rule was “an important step in the right direction.”
The California governor’s office, which had criticized the proposed rule, was also swayed. “The final rules create the certainty needed for developers to invest in and build clean, renewable hydrogen production projects in states like California,” Dee Dee Myers, the director of the Governor’s Office of Business and Economic Development, said in a statement. The state has plans to build a $12.6 billion hub for producing and using clean hydrogen.
Part of the reason the Treasury needed to find a Goldilocks compromise that pleased as many stakeholders as possible was to protect the rule from future lawsuits and lobbying. But not everyone got what they wanted. For example, the energy developer NextEra, pushed the administration to get rid of the hourly matching provision, which though delayed remained essentially untouched. NextEra did not respond to a request for comment.
Companies that fall on the wrong side of the final rules may still decide to challenge them in court. The next Congress could also make revisions to the underlying tax code, or the incoming Trump administration could change the rules to perhaps make them more favorable to hydrogen made from fossil fuels. But all of this would take time — a rule change, for example, would trigger a whole new notice and comment process. Though the one thing I’ve heard over and over is that the industry wants certainty, which the final rule provides, it’s not yet clear whether that will outweigh any remaining gripes.
In the meantime, it's off to the races for the nascent clean hydrogen industry. Between having clarity on the tax credit, the Department of Energy’s $7 billion hydrogen hubs grant program, and additional federal grants to drive down the cost of clean hydrogen, companies now have numerous incentives to start building the hydrogen economy that has received much hype but has yet to prove its viability. The biggest question now is whether producers will find any buyers for their clean hydrogen.
Below is a more extensive accounting of where the Treasury landed in the final rules.
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On “deliverability,” or the requirement to procure clean energy from the same region, the rules are largely unchanged, although they do allow for some flexibility on regional boundaries.
As I explained above, the Treasury Department also kept the hourly matching requirement, but delayed it by two years until 2030 to give the market more time to set up systems to achieve it — a change Schneider said was “really disappointing” due to the potential emissions consequences. Until then, companies only have to match their operations with clean energy on an annual basis, which is a common practice today. The new deadline is strict, and those that start operations before 2030 will not be grandfathered in — that is, they’ll have to switch to hourly matching once that extended clock runs out. In spite of that, the final rules also ensure that producers won’t be penalized if they are not able to procure clean energy for every single hour their plant operates, an update several groups applauded.
On the requirement to procure clean power from newly built sources, also known as “incrementality,” the department made much bigger changes. It kept an overarching definition that “incremental” generators are those built within three years of the hydrogen plant coming into service, but added three major exceptions:
1. If the hydrogen facility buys power from an existing nuclear plant that’s at risk of retirement.
2. If the hydrogen facility is in a state that has both a robust clean electricity standard and a broad, binding, greenhouse gas cap, such as a cap and trade system. Currently, only California and Washington pass this test.
3. If the hydrogen facility buys power from an existing natural gas or coal plant that has added new carbon capture and storage capacity within three years of the hydrogen project coming into service.
The hydrogen tax credit is so lucrative that environmental groups and energy analysts were concerned it would drive companies like Constellation to start selling all their nuclear power to hydrogen plants instead of to regular energy consumers, which could drive up prices and induce more fossil fuel emissions.
The final rules try to limit this possibility by only allowing existing reactors that are at risk of retirement to qualify. But the definition of “at risk of retirement” is loose. It includes “merchant” nuclear power plants — those that sell at least half their power on the wholesale electricity market rather than to regulated utilities — as well as plants that have just a single reactor, which the rules note have lower or more uncertain revenue and higher operational costs. Looking at the Nuclear Energy Institute’s list of plants, merchant plants make up roughly 40% of the total. All of Constellation Energy’s plants are merchant plants.
There are additional tests — the plant has to have had average annual gross receipts of less than 4.375 cents per kilowatt hour for at least two calendar years between 2017 and 2021. It also has to obtain a minimum 10-year power purchase agreement with the hydrogen company. Beyond that, the reactors that meet this definition are limited to selling no more than 200 megawatts to hydrogen companies, which is roughly 20% for the average reactor.
Esposito, who has closely analyzed the potential emissions consequences of using existing nuclear plants to power hydrogen production, was not convinced by the safeguards. “I don't love the power price look back,” he told me, “because that's not especially indicative of the future — particularly this high load growth future that we're quickly approaching with data centers and everything. It’s very possible power prices could go up from that, and then all of a sudden, the nuclear plants would have been fine without hydrogen.”
As for the 200 megawatt cap, Esposito said it was better than nothing, but he feels “it's kind of an implicit admission that it's not really, truly clean” to produce hydrogen with the energy from these nuclear plants.
Schneider, on the other hand, said the safeguards for nuclear-powered hydrogen projects were adequate. While a lot of plants are theoretically eligible, not all of their electricity will be eligible, he said.
The rules assert that in states that meet the two criteria of a clean electricity standard and a binding cap on emissions, “any increased electricity load is highly unlikely to cause induced grid emissions.”
But in a paper published in February, Energy Innovation explored the potential consequences of this exemption in California. It found that hydrogen projects could have ripple effects on the cap and trade market, pushing up the state’s carbon price and triggering the release of extra carbon emission allowances. “In other words, the California program is more of a ‘soft’ cap than a binding one — the emissions budget ‘expands or contracts in response to price bounds set by the legislature and [California Air Resources Board],’” the report says.
Esposito thinks the exemption is a risk, but that it requires further analysis and he’s not sounding the alarm just yet. He said it could come down to other factors, including how economical hydrogen production in California ends up being.
Producers are also eligible for the tax credit if they make hydrogen the conventional way, by “reforming” natural gas, but capture the emissions released in the process. For this pathway, the Treasury had to clarify several accounting questions.
First, there’s the question of how producers should account for methane leaked into the atmosphere upstream of the hydrogen plant, such as from wells and pipelines. The proposal had suggested using a national average of 0.9%. But researchers found this would wildly underestimate the true warming impact of hydrogen produced from natural gas. It could also underestimate emissions from natural gas producers that have taken steps to reduce methane leakage. “We branded that as one size fits none,” Schneider told me.
The final rules create a path for producers to use more accurate, project-specific methane emissions rates in the future once the Department of Energy updates a lifecycle emissions tool that companies have to use called the “GREET” model. The Environmental Protection Agency recently passed new methane emissions laws that will enable it to collect better data on leakage, which will help the DOE update the model.
Schneider said that’s a step in the right direction, though it will depend on how quickly the GREET model is updated. His bigger concern is if the Trump administration weakens or eliminates the EPA’s methane emissions regulations.
The Treasury also opened up the potential for companies to produce hydrogen from alternative, cleaner sources of methane, like gas captured from wastewater, animal manure, and coal mines. (The original rule included a pathway for using gas captured from landfills.) In reality, hydrogen plants taking this approach are unlikely to use gas directly from these sources, but rather procure certificates that say they have “booked” this cleaner gas and can “claim” the environmental benefits.
Leading up to the final rule, some climate advocates were concerned that this system would give a boost to methane-based hydrogen production over electricity-based production, as it's cheaper to buy renewable natural gas certificates than it is to split water molecules. Existing markets for these credits also often overestimate their benefits — for example, California’s low carbon fuel system gives biogas captured from dairy farms a negative carbon intensity score, even though these projects don’t literally remove carbon from the atmosphere.
The Treasury tried to improve its emissions estimates for each of these alternative methane sources to make them more accurate, but negative carbon intensity scores are still possible.
The department did make one significant change here, however. It specified that companies can’t just buy a little bit of cleaner methane and then average it with regular fossil-based methane — each must be considered separately for determining tax credit eligibility. Jenkins, of Princeton, told me that without this rule, huge amounts of hydrogen made from regular natural gas could qualify.
Producers also won’t be able to take this “book and claim” approach until markets adapt to the Treasury’s reporting requirements, which isn’t expected until at least 2027.
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In a press conference about the newly recast program’s first loan guarantee, Energy Secretary Chris Wright teased his project finance philosophy.
Energy Secretary Chris Wright on Thursday announced a $1.6 billion loan guarantee for American Electric Power to replace 5,000 miles of transmission lines with more advanced wires that can carry more electricity. He also hinted at his vision for how the Trump administration could recast the role of the department's Loan Programs Office in the years to come.
The LPO actually announced that it had finalized an agreement, conditionally made in January under the Biden administration, to back AEP’s plan. The loan guarantee will enable AEP to secure lower-cost financing for the project, for an eventual estimated saving to energy consumers of $275 million over the lifetime of the loan.
“These are the kind of projects where we’re going to partner with businesses to make our energy system more efficient, more reliable, ultimately lower cost,” Wright said on a call with reporters.
And yet in the past few months, the department has also canceled loan guarantees and grants for other transmission projects that were expected to provide those same benefits — including the Grain Belt Express, an 800-mile line set to bring low-cost wind power from Kansas to the Chicago metropolitan area in Illinois.
“We don’t care about authorship,” Wright told reporters, acknowledging that the AEP loan was conditionally approved by the Biden administration. “Not all of them were nonsense. The ones that are in the interest of the American taxpayers, in the interest of the American ratepayers, and there’s a helpful role for government capital — we’re happy to support those.”
When asked specifically why AEP’s proposal met his criteria while the Grain Belt Express didn’t, Wright first made an argument about cost. “I have nothing against the Grain Belt Express,” he said. “I suspect it’ll still be developed. But it’s far more expensive on a per mile basis since it’s a brand new transmission line.”
His subsequent comments, however, hinted at a more significant shift in approach. He went on to argue that the project came with an unacceptable amount of risk since the developers didn’t have buyers yet for the power coming down the line. It was trying to “close on arbitrage,” he said, by buying up cheap wind power that was stranded in Kansas and bringing it to a larger market. “It’s a more commercial enterprise,” he said. “That’s done with private entrepreneurs and private capital.”
It’s important to note that the Grain Belt Express loan guarantee would have been issued under an innovation-focused program within the Loan Programs Office that was specifically geared toward higher risk projects that banks won’t otherwise touch. The AEP project is part of a different program focused on more mature technologies, with a goal of reducing the cost of major utility infrastructure upgrades to ratepayers.
When I floated Wright’s comments by Jigar Shah, the former head of the Loan Programs Office under the Biden administration, he was flummoxed. “It’s nonsensical,” he said. To Shah, taking Wright’s risk aversion to its logical conclusion would mean, for instance, that the office should not fund any nuclear energy projects. “If this becomes a new standard, that means nuclear is dead in the United States,” he said.
AEP is the first developer to secure a loan guarantee under the Energy Dominance Financing Program, Congress’ new name a Biden-era program within LPO that offered loan guarantees to utilities to “retool, repower, repurpose, or replace energy infrastructure.” Initially called the Energy Infrastructure Reinvestment Financing Program and created by the Inflation Reduction Act, it focused on projects with climate benefits, like making efficiency upgrades to power plants or installing renewables on the site of a former coal plant.
In the Biden administration’s view, AEP’s project would “contribute to emissions reductions by supporting existing and new clean generation by expanding transmission capacity in the regions in which they operate.”
Trump’s One Big Beautiful Bill Act rebranded the program and removed any requirements that projects reduce emissions. On Thursday’s call, Wright seemed to imply that it wasn’t just the Biden-era loan program that had been renamed. “The Loan Program Office is being rechristened the Energy Dominant Financing — it is the rechristening of the same department,” he said in response to a question about the office’s remaining loan authority. The Department of Energy did not respond to my request for clarification.
None of that means that the potential emissions benefits from AEP’s project won’t materialize. Limited transmission capacity is one of the biggest obstacles for bringing new wind and solar power online, and reconductoring could also reduce line losses, making the overall grid more efficient.
The transmission project — which includes plans to rebuild some power lines and reconductor others — will ultimately increase capacity by more than 100%, a spokesperson for AEP told me. The first phase will involve upgrades to about 100 miles of wires across Ohio and Oklahoma, while future phases will tackle lines in Indiana, Michigan, and West Virginia, with the intent of meeting growing demand from data centers and manufacturing development, according to a press release.
When reporters asked Wright about the other conditional loan guarantees the Biden administration had issued under the Energy Infrastructure Reinvestment program that are still pending, the secretary stressed that he was looking for applicants that had identified a clear set of projects they would implement. “Many were done in a hurry, without really even having the projects that the loans would be associated with identified. You can end up with a grab bag of projects without a lot of say for where the money went,” he said.
Wright accused the Biden administration of failing to ask applicants to detail the impact the projects would have on taxpayers and ratepayers — a key question his colleagues are now asking.
Shah disagreed with that portrayal. The whole point of the program was to reduce interest rates for utilities and require them to pass on the benefit to ratepayers. All of the projects awarded conditional commitments met that bar, he said.
He warned that if the Trump administration didn’t honor the remaining conditional commitments to utilities under the program — all 10 of them — it risked losing the trust of any new companies it attempts to make similar deals with.
“Most of the nuclear projects that they’re looking to chase are not going to get closed until 2028. And so what signal are they sending? That projects that get approved in the last year of an administration are not going to be honored in the next administration?”
On a new loan guarantee, a Nord Stream 2 revival, and AI-aided oil recovery
Current conditions: As Tropical Storm Lorenzo looks likely to dissipate over water by Friday, AccuWeather has slashed the season’s forecast to six hurricanes from nine • Severe thunderstorms near Little Rock, Arkansas, and Memphis, Tennessee, are likely too spotty to relieve long-standing drought in the Mississippi River Basin • The Netrokona district of northeastern Bangladesh is scorching in temperatures nearing 100 degrees Fahrenheit.
A rendering of the future Cascade Advanced Energy Facility. Amazon
A year after Amazon invested in the small modular reactor developer X-energy, the tech giant has unveiled its plans to build a nearly gigawatt-sized plant in southeastern Washington, where it will install the nuclear company’s next-generation technology for the first time. The Cascade Advanced Energy Facility is set to begin construction “by the end of this decade,” with hopes of generating power from up to a dozen of X-energy’s 80-megawatt high-temperature gas-cooled reactors sometime “in the 2030s.” Amazon plans to build the plant in three phases, with four reactors at each stage, eventually reaching 960 megawatts in capacity. Located in Richland, Washington, along the Columbia River, the facility will nearly double the output of the Pacific Northwest’s only nuclear plant, the nearby Energy Northwest’s Columbia Generating Station.
In a sign of what Heatmap’s Katie Brigham called “the nuclear dealmaking boom” back in August, rival microreactor developer Oklo suggested at a recent public meeting in Tennessee that it may propose building some of its reactors near the Oak Ridge site of its debut nuclear waste recycling project, the Knoxville News Sentinel reported Monday. On Tuesday, meanwhile, the U.S. Army announced its new Janus program, which aims to supply bases by 2028 with microreactors like the ones Oklo aims to build, which generate 20 megawatts of electricity or less. The reactors would be owned and operated by private companies. “What resilience means to us is that we have power, no matter what, 24-7,” Jeff Waksman, principal deputy assistant secretary of the Army, told The Wall Street Journal.
The Department of Energy’s Loan Programs Office has largely revoked deals made under the previous administration since President Donald Trump returned to office. But on Thursday morning, the agency’s in-house lender announced a $1.6 billion loan guarantee to a subsidiary of utility giant American Electric Power to upgrade and rebuild about 5,000 miles of transmission lines across Indiana, Michigan, Ohio, Oklahoma, and West Virginia. “This loan guarantee will not only help modernize the grid and expand transmission capacity but will help position the United States to win the AI race and grow our manufacturing base,” Secretary of Energy Chris Wright said in a press release.
The move came a day after a federal judge blocked the Trump administration’s effort to fire thousands of federal workers amid the ongoing government shutdown. At a hearing Wednesday, U.S. District Judge Susan Illston, a Clinton appointee based in California, granted labor unions’ request for a temporary restraining order to halt the dismissals. The hearing took place at the same time White House budget director Russ Vought appeared on the late conservative commentator Charlie Kirk’s podcast to preview his plans to lay off as many as 10,000 federal workers as the shutdown continued. The hearing will pause the job cuts for the roughly 4,000 workers who received notice so far. Illson said during the hearing that she granted the temporary restraining order because administration officials had “taken advantage of the lapse in government spending, government functioning, to assume that all bets are off, that the laws don’t apply to them anymore, and that they can impose the structures that they like on the government situation that they don’t like,” News From The States reported. “Things are being done before they’re thought through — very much ready, fire, aim.” Nearly 200 employees at the Department of Energy began receiving notices last week, as I wrote in yesterday’s newsletter.
The underwater explosion of the Nord Stream 2 pipeline connecting Germany to Russia’s gas supply remains one of the world’s biggest geopolitical whodunnits, and Berlin’s fellow European Union members seem keen to keep it that way. In just the past two days, Poland and Italy blocked extradition requests to send suspected saboteurs to Germany for trial. But the Germans aren’t just looking to figure out who’s responsible for destroying the megaproject. The Federal Ministry for Economic Affairs and Energy is considering restarting the certification process for the pipeline, the daily newspaper Der Tagesspiegel reported Wednesday. The previous German government had ruled out a restart of the pipeline in March after news broke that Russian President Vladimir Putin’s business allies were angling to restore the project. In June, the new government under conservative Chancellor Friedrich Merz began examining legal avenues to block any future plans to reactivate the pipeline, the Financial Times reported at the time. But under current law, the economic ministry said this week a restart “cannot be ruled out in the medium term.”
Ohio passed a new law to fast-track energy projects on former coal mines and brownfields, Canary Media reported Wednesday. Called House Bill 15, the legislation took effect in August and lets the state’s Department of Development designate the former industrial sites as “priority investment areas” at the request of local governments. Roughly a third of Ohio’s 88 counties ban wind, solar, or both, but the language in the bill makes clear that “it was meant to be technology-neutral,” Rebecca Mellino, a climate and energy policy associate at The Nature Conservancy, told Canary’s Kathiann M. Kowalski.
A transition from coal could yield significant health benefits, as The New York Times reported on Tuesday. A recent study found that, when a coal-processing facility near Pittsburgh shut down, the number of emergency room visits for respiratory issues in the surrounding area dropped by about 20% in the month following the closure.
The world’s annual consumption of oil isn’t expected to peak until the mid-2030s, and by 2050 it will reach a cumulative 1 trillion barrels, according to the consultancy Wood Mackenzie’s forecast. But production that’s either already onstream or ready for development is expected to gradually decline to 650 billion barrels per year by the mid century. What will make up the difference? “Traditional exploration will play its part but can’t get anywhere near bridging a gap of this scale,” Wood Mackenzie analysts wrote in a blog post on Wednesday. “Even the 21st century’s biggest new play, Guyana, with 15 billion barrels of oil, barely makes a dent.” To identify potential new resources, Wood Mackenzie rolled out a new AI-powered benchmark called Analogues, which “uses a machine learning method known as clustering to identify each field’s closest matches across 60 different attributes spanning rock properties, fluid characteristics, and commercial factors.” The AI tool could increase the share of recoverable conventional oil reserves by nearly 42%.
A chart showing how the AI "analogues" could bolster oil drilling. Wood Mackenzie
Fusion energy is rapidly accelerating in the U.S., and the Department of Energy is poised to release a national plan for speeding up the deployment of the technology. In the meantime, states can prepare by beefing up regulatory capacity, speeding up permitting, clearing interconnection queues, and creating special tax credits. That’s according to a new roadmap from the Clean Air Task Force. “As fusion energy moves closer to commercial reality, states have a window of opportunity to prepare,” Jack Moore, a fusion policy consultant at CATF, wrote in a blog post. “Proactive policy design today can help states position themselves to create an effective environment for fusion energy deployment tomorrow.”
Editor’s note: This story has been updated accurately reflect oil demand by 2050.
This thing is a certified clunker.
Americans certainly got the message about the end of the EV tax credit. With the $7,500 benefit set to disappear at the end of September, electric vehicle sales surged to record numbers in the third quarter of 2025 as buyers raced to beat the deadline.
The rising tide lifted just about all EVs — but not the struggling Tesla Cybertruck. According to new numbers from Kelley Blue Book, Tesla sold just 5,385 Cybertrucks from July to September, less than half as many as it delivered during the same period in 2024. The company is now expected to sell around 20,000 of the metal EVs this calendar year. That’s down from around 50,000 last year, and less than 10% of the 250,000 total Elon Musk once predicted as the truck’s annual sales figure.
Cybertruck was well on its way to flop status before these sales numbers. With its purposefully jarring aesthetic, the EV for edgelords was never going to be as popular as Musk proclaimed, and that was before his relationship to Donald Trump and online provocations pushed many more people away from the Tesla brand. Cost didn’t help, either. Tesla once said it would sell a $40,000 basic version of Cybertruck, a price point that might have enticed some buyers beyond the Musk fanboys who became early adopters, but the cheapest one you can actually buy today is around $60,000.
Still, the vehicle’s third-quarter performance is particularly damning in comparison to nationwide EV sales, where the tax credit’s demise ignited a fire sale. Americans bought more than 430,000 EVs during the quarter, an increase of about 40% from the second quarter of 2025 and about 30% from the third quarter of last year. Popular vehicles including the Chevy Equinox EV, Hyundai Ioniq 5, Ford Mustang Mach-E, and Honda Prologue surged to sales of more than 20,000 during the quarter. Electric trucks including the Rivian R1T, Ford F-150 Lightning, and GMC Hummer EV saw sales increases despite having high prices that rival the Cybertruck’s.
Tesla itself, despite months of bad press, did well, too. The brand’s share of the overall EV market continues to wane, reaching a new low of 41%. But the surge temporarily stabilized its tumbling sales, with plenty of people snatching up Model 3s and Model Ys while the getting was good. Those two vehicles remained the two best-selling EVs in America, with Tesla selling more than 114,000 Model Ys and more than 53,000 Model 3s.
Yet the good times did nothing to spur driver interest in Cybertruck. In fact, public enthusiasm for the vehicle might be even lower than it seems, because it turns out that one of the top customers for Musk’s electric tank is Musk himself. Electrek reports that his other companies, such as SpaceX and xAI, have been accumulating Cybertrucks as their company cars. Tesla is replacing some of its own fleet with Cybertrucks, as well.
The move makes sense for Musk. Because of weak overall demand, Cybertrucks are sitting idle on lots; selling them to his businesses at least puts them to work. The scheme also might improve the appearance of Tesla’s sales numbers, Electrek speculates. By locking in some of these sales with a downpayment before the end of September, Tesla can deliver Cybertrucks to Musk’s other business in the weeks to come and still get the tax credit on them. The approach could boost sales numbers for a fourth quarter that’s likely to be difficult with the disappearance of the federal incentive.
Now that Cybertruck has become Elon’s Edsel, Tesla’s hopes for an EV sales revival lie largely with the new “Standard” versions of its two best-sellers. These trim levels strip away some of the amenities from the Models 3 and Y to bring their starting prices down to $37,000 and $40,000, respectively. It’s far from clear that this will succeed. Anyone shopping for an EV solely on price could wait for the upcoming new versions of the Nissan Leaf and Chevy Bolt, which are expected to come in at $30,000 or less. The Equinox’s $35,000 starting price, five-grand less than even the budget Model Y crossover, has spurred its recent success.
Still, with 320-plus miles of estimated range and at least some of Tesla’s best features, the budget versions could be compelling cars at those prices. At the very least, they’ll speak to more drivers than the Cybertruck does.