Tesla starts short-term rental service as EV tax credits expire
- ByStartupStory | November 11, 2025
Tesla has launched a short-term rental service at two of its California stores—in San Diego and Costa Mesa—as a strategic response to declining EV sales following the expiration of the $7,500 federal electric vehicle tax credit on October 1, 2025. This new rental program allows customers to rent Tesla vehicles for three to seven days, with daily rates starting at $60 depending on the model.
To make the offer more attractive, Tesla is providing renters with free access to its Supercharger network and supervised Full Self-Driving features during the rental period at no additional cost. Furthermore, customers who decide to purchase a Tesla within a week of renting are eligible for a $250 credit, encouraging them to transition from renting to ownership.
This move comes as the U.S. EV market experiences a slump after the surge in demand driven by the tax credit rush. Tesla, along with other EV manufacturers like Lucid and Rivian, is exploring innovative ways to keep vehicles moving off lots and generate revenue. Unlike third-party rental companies such as Hertz, which also offer Teslas but take the revenue cut, Tesla’s direct rental program lets the company capture the full rental income.
Tesla’s rental initiative serves multiple purposes: it helps minimize showroom inventory buildup, introduces more customers to Tesla’s vehicles and ecosystem, and potentially converts renters into buyers. The provision of free charging and full self-driving trials not only enhances the rental experience but also showcases Tesla’s unique technological edge.
Industry analysts see this as part of a larger trend in the EV sector adjusting to the post-incentive market environment, where companies must innovate beyond relying on government subsidies. For Tesla, converting sales locations into revenue-generating rental hubs represents a strategic pivot to sustain brand engagement and financial stability.
Tesla plans to expand its rental service to more locations nationwide by the end of the year, signaling its commitment to exploring new business models amid changing market dynamics.
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