Tesla (TSLA) stock could “implode” if President Trump takes away vital government electric vehicle subsidies.
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In an article for Sky News in the U.K., investment analyst Gordon Johnson said the proposed changes by the Trump administration had negative implications for Tesla’s fundamentals.
Burning Cash
“If all of these government programs were taken away, Tesla would go into losing money and burning cash and the stock would implode,” he warned.
According to Sky News, revenue from state subsidies accounted for at least 38% of Tesla’s profits of $7.1 billion in 2024 as the company banked $2.8 billion from trading “regulatory credits,” a state-level subsidy paid to encourage production of electric vehicles.
In addition, under Trump’s ‘Big Beautiful Bill’, taxpayers will no longer be able to claim a tax credit worth up to $7,500 for purchasing a new electric vehicle, or up to $4,000 for a used EV.
Trump’s Truth
Trump’s threats to end Tesla support came in a Truth Social post earlier this month. The President said: “Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa.”
It was the end of a ‘big, beautiful, bromance’ between the pair. Musk’s money arguably helped Trump regain power, with Musk being handed a governmental role as head of the Department of Government Efficiency.
The reputational hit, as well as not focusing on the day job, has hit the Tesla share price. It is down 21% this year.
It had been hoped that Musk would make his business work a priority once again after leaving government, but his intention to create a new political party has threatened that.
Ross Gerber, an early investor in Tesla told Sky that Musk was playing a “dangerous game.” He said he was selling his Tesla stock and even considering ditching his Cybertruck.
Is TSLA a Good Stock to Buy Now?
On TipRanks, TSLA has a Hold consensus based on 13 Buy, 13 Hold and 8 Sell ratings. Its highest price target is $500. TSLA stock’s consensus price target is $298.97 implying a 6.40% downside.
