The "Big Beautiful Bill," also known as the One Big Beautiful Bill Act, is a comprehensive tax legislation that extends provisions of the 2017 Tax Cuts and Jobs Act and includes new measures. Its impact on Tesla, Inc. (TSLA) stocks is multifaceted and primarily negative, stemming from several key aspects of the bill:
- Elimination of EV Tax Incentives: The bill proposes to eliminate the federal electric vehicle (EV) tax credit, which is a critical incentive for EV buyers. Tesla, being the leading EV manufacturer, stands to lose a substantial portion of its EBIT (Earnings Before Interest and Taxes) if this provision becomes law. Analysts estimate that the removal of these credits could represent a $1.2 billion headwind for Tesla, affecting both demand and margins12.
- Ban on California ZEV Program: The bill also aims to outlaw the California Air Resources Board’s Zero Emission Vehicle (ZEV) program, which provides Tesla with regulatory credits. Without these credits, Tesla would have reported a loss in the last quarter1.
- Potential Increase in Wages: Despite the negative impacts, the bill includes provisions that could raise wages, such as increasing the child tax credit to $2,500 per family3. However, these benefits may not directly offset the losses from the EV tax credits.
- Market Sentiment and Stock Performance: The proposed bill has led to a sharp decline in Tesla's stock value. Following Elon Musk's criticism of the bill, Tesla's stock took a significant nosedive, erasing all gains since early May. This reflects broader market concerns and potential investor sentiment shifts due to the perceived negative impact on Tesla's financial health4.
In conclusion, while the bill includes some tax cuts and revenue increases, the elimination of EV tax incentives and the ban on the California ZEV program are likely to have a more significant and negative impact on Tesla's financial performance and market sentiment. The net effect could be a substantial challenge for Tesla's earnings and stock value.
6/5/2025 08:23pm
