Tesla Short Sellers Set to Pocket $1.4 Billion in Profits

Tesla short sellers are set to pocket approximately $1.4 billion in profits following the company's recent stock slump. The firm's net sales are primarily driven by the sale of automotive vehicles, services, and energy generation and storage systems. With manufacturing sites in the US, China, and Germany, Tesla's net sales are geographically distributed among the US, China, and other regions.

The House passed President Donald Trump's tax bill on Thursday, which extends the 2017 tax cuts and ends the $7,500 EV tax credit for buyers after September 30. This move has significantly impacted the stock prices of electric vehicle (EV) manufacturers, with Tesla being one of the most affected [1].

Tesla's stock has experienced a notable slump, leading to short sellers pocketing approximately $1.4 billion in profits. The company's net sales are primarily driven by the sale of automotive vehicles, services, and energy generation and storage systems. Tesla's manufacturing sites are distributed across the US, China, and Germany, contributing to its geographically diverse revenue streams [1].

The loss of the EV tax credit is expected to decrease Tesla's sales volume, as consumers have increased long-range EV choices at similar price points. Analysts predict that the expedited elimination of the EV tax credit could be the biggest area impacting Tesla's performance. Seth Goldstein, an equity strategist at Morningstar, noted that the tax credit elimination could decrease sales volume, which Tesla has been struggling with [1].

JPMorgan analyst Ryan Brinkman wrote in a note last month that Trump's bill, combined with other proposed legislation, threatens more than half of Tesla's 2025 profits. The $7,500 consumer tax credit made up 19% of Tesla's 2024 earnings before interest and tax [1].

Meanwhile, Tesla's rivals Rivian and Lucid have seen their stocks rise following the tax bill's passage. Rivian and Lucid stocks rose as much as 4.6% and 8.8%, respectively, on Thursday, benefiting from the elimination of the EV tax credit. Rivian and Lucid are expected to see increased demand for their vehicles due to the tax credit removal, although Rivian's vehicles do not qualify for the credit [1].

In conclusion, the passing of Trump's tax bill has had a significant impact on the EV market, with Tesla facing a potential decrease in sales volume due to the loss of the EV tax credit. Meanwhile, Rivian and Lucid have seen their stocks rise, indicating that they are set to benefit from the tax credit removal.

References:
[1] https://www.businessinsider.com/rivian-lucid-stock-trump-tax-bill-passed-tesla-ev-credit-2025-7