Tesla (TSLA) CEO Elon Musk put up a valiant fight against President Trump’s “one, big, beautiful, bill,” although the legislation was ultimately signed into law. That could spell trouble for TSLA stock, as the bill will end the $7,500 federal EV credit on September 30, which could cause some potential buyers to hesitate.
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Tesla’s income could also take a dent from the loss of regulatory credits resulting from the bill. EV makers receive credits for producing zero-emission vehicles, which they then sell to traditional internal combustion engine (ICE) automakers that violate emission standards. Buying these credits offset their violations.
Tesla’s Income at Risk from Loss of Government Support
However, Trump is set to scrap fines for ICE automakers that fail to meet National Highway Traffic Safety Administration (NHTSA) corporate average fuel economy (CAFE) standards. That could lead to lower demand for regulatory credits.
Tesla also receives credits from the U.S. Environmental Protection Agency and California’s zero-emission vehicle program. The future of these credits is still up in the air. Excluding these credits from Tesla’s first quarter earnings would have resulted in a net loss.
For the quarter, analysts expect Tesla to report revenue of $22.13 billion and an adjusted EPS of $0.40.
TSLA stock is muted ahead of its earnings after the closing bell today as investors brace for volatile news.
