Despite Tesla CEO Elon Musk being close to President Donald Trump, which was supposed to be bullish for electric vehicles (EVs), the market is selling off most EV and renewable energy stocks this week. The biggest reason is the government beginning to make moves that will hurt the industry, and it could get worse.

There were a lot of big declines this week, but the most notable as I write this are Rivian (RIVN 1.85%) falling 9.3% for the week, according to data provided by S&P Global Market Intelligence, Fluence Energy (FLNC -3.93%) dropping 19%, and ChargePoint (CHPT 1.51%) dropping 15.8%. While this week may be bad, it may only be the beginning if policies get worse.

Renewables go to the back of the line

We haven't seen action against the $7,500 EV tax credit or other subsidies for renewable energy, but that could be coming as Trump ordered the federal government to sell 25,000 EV chargers. The chargers will be sold at a loss and may cost more to remove than they can be sold for, so it's easy to see this as a war on renewable energy.

This follows the administration's pausing $3 billion in funding for EV charging stations. It's no surprise that ChargePoint's stock isn't reacting to this news positively.

More renewable support may be next

Companies like Fluence and Rivian are dropping because the market is speculating that other renewable energy support will be next. The $7,500 tax credit could be cut or eliminated and generous subsidies for renewable energy generation and batteries could hurt Fluence's economics, which already aren't great.

Losses are piling up

For each of these three companies the losses are piling up. Rivian is losing the most and ChargePoint's losses look unsustainable, but even Fluence is losing money and customers are delaying projects. That resulted in a $600 million reduction in 2025 revenue guidance.

FLNC Net Income (TTM) data by YCharts

The EV market in particular seems challenged with supply increasing faster than demand and companies struggling to improve margins. Rivian said it generated positive gross margins last quarter, but that included $300 million in one-time EV credits and the company isn't going to increase production this year.

The renewable energy market has been here before

Subsidies ebb and flow in the industry and right now investors are on the wrong side of that trend.

What typically happens is the companies with bad economics or weak balance sheets have a hard time adjusting to fewer subsidies and their losses get even worse.

The reason falling stock prices are key is the stock can be a major source of funding. It's hard for these companies to borrow money at attractive rates, so they sell stock to stay afloat. But as stock prices fall that option dries up as well, and in an unsustainable business, that can lead to stocks plunging to zero.